Please ensure Javascript is enabled for purposes of website accessibility

Why Ardelyx Stock Is Getting Crushed Today

By George Budwell - Jul 20, 2021 at 8:25AM

Key Points

  • Regulatory reviews for small-cap drugmakers are always an ultra-risky affair.

Motley Fool Issues Rare “All In” Buy Alert

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The FDA doesn't appear to be impressed by the biotech's experimental kidney disease drug.

What happened

Shares of the small-cap biotech Ardelyx (ARDX 4.02%) fell by a whopping 73.2% in pre-market action Tuesday morning. The drugmaker's stock is tanking today in response to a July 13 letter from the U.S. Food and Drug Administration regarding the company's New Drug Application (NDA) for tenapanor as a treatment for controlling serum phosphorus in adult patients with chronic kidney disease (CKD) on dialysis.

Per a press release from Ardelyx, the letter reportedly stated that the FDA found deficiencies in the NDA that preclude discussion around the would-be labeling and post-marketing requirements for tenapanor. Most importantly, the FDA said it detected issues with both the size and clinical relevance of the drug's treatment effect. 

A person seen from behind, with an illustration of kidneys on their lower back.

Image source: Getty Images.

So what

The FDA is slated to hand down a final decision on tenapanor's NDA on July 29. However, from the sound of things, the agency doesn't plan on approving the drug during this review cycle. The FDA, in fact, refused to even meet with Ardelyx to discuss the NDA's areas of concern, according to the company. That's a fairly strong sign that a Complete Response Letter (aka a rejection) is probably on the way -- a sentiment that's clearly being echoed by the biotech's shareholders today. 

Now what

Is Ardelyx a bad news buy? The FDA questioning tenapanor's efficacy at this extremely late stage of the game is unusual to say the least. That doesn't mean the agency's take is wrong, however. The fact of the matter is that investors need a lot more info to make a solid decision on the biotech's value proposition following this unexpected turn of events. In other words, it might be wise to simply watch this falling knife from this sidelines for now. 

George Budwell has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Ardelyx, Inc. Stock Quote
Ardelyx, Inc.
$0.85 (4.02%) $0.03

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/08/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.