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What: Shares in Ardelyx, Inc (NASDAQ:ARDX) tumbled by more than 10% today after reporting a higher than expected incidence of diarrhea in patients taking its chronic kidney disease treatment tenapanor during phase 2b trials.

So what: As kidney function drops in patients suffering from end stage renal failure, phosphorous can build up in the bloodstream, creating additional life threatening risks.

As a result, end stage renal disease patients can be prescribed nine or more phosphate binding pills daily. That's an onerous regimen that suggests that there could be a market opportunity for Ardelyx's tenapanor, which is being co-developed by AstraZeneca (NYSE:AZN).

In the phase 2b trials, Ardelyx and AstraZeneca studied tenapanor across six doses and found that the drug's ability to lower phosphate levels improved with the size of the dose and that tenapanor was particularly effective as a twice daily treatment.

Now what: The study met its primary endpoint of statistically reducing phosphate levels more than placebo; however, the surprising incidence rate of diarrhea casts a shadow over potential market demand for tenapanor.

Since there are an estimated 280,000 people in the U.S. currently taking phosphate binding drugs, it will be important to learn whether or not Ardelyx and AstraZeneca can figure out a solution to this problem. Regardless, tenapanor remains a mid stage clinical stage drug, and that means that Ardelyx remains a risky bet that only the most risk tolerant of investors should consider owning.