TCDA (2020 - Q2)

Ladies and gentlemen, thank you for standing by. And welcome to the Tricida Second Quarter Financial Results Conference Call. [Operator Instructions] I would now like to hand the conference call over to Jackie Cossmon, Senior Vice President of Investor Relations and Communications for Tricida. Please go ahead, ma'am. Jackie C

Thank you, Victor. Good afternoon, and thank you for joining the Tricida Second Quarter 2020 Financial Results Conference Call. In today's call, Gerrit Klaerner, our Founder, CEO and President, will discuss our business progress; and Geoff Parker, our CFO, will then discuss our financial results for the first quarter - for the second quarter. Please note that in today's call, we will be making various statements that include forward-looking statements as defined under applicable securities laws. Forward-looking statements include anticipated activities related to our NDA filings, including the assigned PDUFA goal date and anticipated communication from the FDA regarding the status of our application including the potential receipt of a complete response letter, the potential approvability of veverimer through the accelerated approval program, our commercial and medical affairs education activities, the conduct of our VALOR-CKD confirmatory post-marketing trial, including the timing of the interim analysis and anticipated completion of the study, financial guidance and other statements that are not historical facts. Management's assumptions and expectations and opinions reflected in these forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from any results - future results, performance or achievements discussed in or implied by such forward-looking statements. Tricida can give no assurance that these statements will prove to be correct and we do not intend and undertake no duty to update these statements. We also urge you to read the risks and uncertainties associated with our business that are described in our filings with the Securities and Exchange Commission. For a copy of our press release that was issued prior to this call, please go to www.tricida.com and follow the link to our Investor Relations page. At this time, I'll turn the call over to Gerrit.

Thank you for joining us today on our second quarter financial results call. In today's call, I will cover 4 topics: First, a recap of our recent FDA communications; second, an overview of the unchanged fundamentals and the data supporting the safety, efficacy and potential approval of veverimer; third, a summary of feedback from the nephrology community on the unmet medical need that metabolic acidosis presents and the desire for an FDA approved therapy; and finally, an overview of our progress and outlook for ongoing VALOR-CKD trial. I'll begin with a quick review of the FDA notification we have received recently and our expected next steps. We received notice on July 14 that the FDA has identified deficiencies during its review of the veverimer NDA that include discussion of labeling and post-marketing requirements commitments at this time. The FDA stated that the notification does not reflect the final decision on the information under review. The FDA did not provide any further information or clarity around the nature of the issues underlying the letter or any guidance on timing on when they will provide additional information regarding our NDA review. However, we currently assume that when the FDA does provide additional correspondence regarding the identified deficiencies, it will likely come on or before our critical goal date of August 22. And while we have no additional information since the July 14, 2020 notification, we believe we are likely to receive clarification on their issues in the form of a complete response letter, or a CRL, and that it is unlikely that we will receive approval to market the veverimer in the United States on our PDUFA goal date. We were and continue to be surprised and disappointed by this notification from the FDA. We will be prepared to address the FDA's outstanding issues and plan to promptly request a Type A meeting, which are granted to typically resolve in a meeting with the FDA within 30 days of our request and submission of operating materials. We've worked closely with the FDA during the veverimer program to gain approvals of the Accelerated Approval Program. Our goal is to continue this collaborative approach on any issues that the FDA raises in the future. While we will work through any deficiencies cited by the FDA, it is important to note that we continue to believe that the fundamentals of veverimer itself based on our interaction with many expert nephrologists, we believe that veverimer continues to have an attractive compelling and positive benefit risk profile. As a reminder, a high from the DEA describing our finance obligations. Veverimer is showing statistically significant increase in serum bicarbonate versus placebo both at week 12 and at week 52 in our TRCA-301E trial. Moreover, veverimer was well targeted, only 2.6% of subject on veverimer discontinued prematurity versus 9.8% of subjects on placebo. And it shows an adverse event profile similar to placebo in the 40-week extension trial. Since this data was published, we've observed no new safety taken from veverimer. As a nonabsorb polymer drug candidate whose mechanism of actions was limited to the GI tract, we believe the risk profile is favorable compared systemic drugs that require an uptake into the bloodstream and subsequent metabolism to be excreted from the human body. With these fundamentals of veverimer intact, there's a clear need for an FDA-approved therapy for these patients. When the FDA provides us with feedback on these areas that confirmed with our NDA, we will be focused on trying to resolve them as quickly as possible. We remain committed to addressing an area of significant unmet medical need for patients with chronic metabolic acidosis and chronic kidney disease. An FDA approved option to treat the approximately 3 million patients with MA to potentially slow their CKD progression is much nearer. As a reminder, approximately 124,000 people initiate dialysis or receive a kidney transplant every year. And there are approximately 100,000 deaths related to end-stage renal disease every year, which is more death per year than breast or prostate cancer. Let me now turn to some important statistics and feedback that we've collected from the approximately 40 specialty account managers who were deployed into their regions across the United States on July 7. To summarize their experiences, the interest from the nephrology community for the metabolic acidosis remains robust. In just the first 12 weeks of being deployed, our specialty account managers have had nearly 6,000 virtual and personal engagements to discuss metabolic acidosis disease awareness with nephrologists and their staff. A significant response to engage with our specialty account managers and hearing about metabolic acidosis is impressive. Feedback has been very positive. The strong acknowledgment that metabolic acidosis is important and that there is a need for an FDA to approve safe and efficacious therapy to treat the serious condition. Our recent endpoint, the key opinion leaders have also highlighted the urgent need to slow CKD progression through the treatment of metabolic acidosis. We've now hosted 6 advisory boards for a total of 72 nephrology experts. There were strong agreements among these nephrologists, if approved, veverimer could be a significant benefit to patients with CKD and MA. With regards to our Medical Affairs activities, more than 5,000 participants, including the nephrologists and other health care providers have attended continuing medical education courses on topics related to metabolic acidosis that we sponsored. Also, in the second quarter, our metabolicacidosis.com website, which is an HCP only educational website, there were 14,000 site visits. This feedback and activity level is one the nephrology community indicates there is also significant interest in how the treatment of metabolic acidosis is linked to improved physical function, not just in the context of bone and muscle health but related to kidney disease progression. In fact, the KDIGO guidelines suggests that initiation of the dialysis should be based primarily on signs and symptoms and overall well-being of the patient not just on their bias, such as eGFR. Subjective and objective measures of physical functioning assess how patients feels and functions, which is relevant in the dialysis initiation decision. I will now turn to an update on our post-marketing trial VALOR-CKD. We continue to believe that we are on track to complete enrollment in this trial in the first half 2021. Ultimately, the VALOR-CKD trial is designed to answer the question, can the VALOR slow CKD progression through the treatment of metabolic acidosis. The primary efficacy end point that will answer the question is composite endpoint of renal death, the initiation of the dialysis, transplantation were over 40% or greater reduction in eGFR, otherwise known as DD40. It's important to also note that the KDQOL Physical Function Survey is a repeated chair stand test, a secondary endpoint in the trial. As a reminder, we observed statistically significant and quite meaningful improvements for subjects of veverimer, a subject on placebo and the KDQOL Physical Function Survey and the repeated chair stand test in our 301E study. As we track the blinded number of primary endpoint events in this trial, we believe that this is a good indication that we have picked the right patient population for this confirmatory outcome trial. We will continue to track event rate in the trial and update you by year's end on the time lines of both our interim analysis and anticipate completion of the VALOR-CKD study. I will now turn the call over to Geoff to discuss our financials.

Thank you, Gerrit, and thank you all for joining us today on the call. I will now provide a brief overview of our financials. Additional details regarding our second quarter results can be found in our press release issued earlier today. Our financial position remains strong. As of June 30, 2020, cash, cash equivalents and investments were $436.9 million. In the second quarter, our R&D expenses were $28.8 million. G&A expense was $28.4 million. Our net loss for the second quarter was $58.2 million or $1.16 per share. Adjusting for certain noncash expenses such as stock-based compensation, our non-GAAP net loss for the second quarter was $48.9 million. In the second quarter, we issued $200 million aggregate principal amount of 3.5% convertible senior notes due 2027. The convertible senior notes are senior unsecured obligations of the company and interest is payable on May 15 and November 15 of each year, beginning on November 15, 2020. The convertible senior notes are convertible into cash, shares of common stock or a combination of cash and shares of common stock at the company's election at an initial conversion rate of approximately 30 shares per $1,000 principal amount which is equivalent to an initial conversion price of approximately $33.23 per share. Finally, we will be evaluating our operating plan and cash runway once we receive additional clarity from the FDA, which as Gerrit indicated, is expected to be on or before our PDUFA goal date of August 22. With that, we will take your questions. Operator?

[Operator Instructions] And our first question will come from the line of Phil Nadeau from Cowen & Company. You may begin.

I appreciate you don't have any more information from the FDA on their objections. But could you remind us of the process that you went through to get the FDA to sign off on the design of the pivotal study and in particular, the serum bicarbonate primary endpoint. Was there any disagreement between you and the FDA in the design? Or are you both on the same page?

Phil, thanks for the question. Yes, we obviously work closely with FDA on the accelerated approval process. And I think it was really a 2-step process. First, really to qualify, we had to reach agreement, which we did, that we are treating a serious disease, that there is an unmet medical need and that we have a surrogate that's likely going to translate to clinical benefit. The second step was a quantitative understanding in terms of how the surrogate really impacts the outcome of interest, in this case, the progression of kidney disease. And we also reached agreement on that. And based on that, we designed both the studies, 301 to 301E and also the ongoing VALOR-CKD confirmatory post approval study.

And then second, I appreciate this may be maybe a bit premature, but if we were to assume data from VALOR-CKD would be necessary, is there any way that you could just accelerate the completion of enrollment in that trial? And/or the time it takes to get to the interim analysis? Do you have levers that you could pull to make you do the those processes go more quickly?

Yes. I want to speculate in terms of the timing of the interim analysis, I think that's something that we'll know more and better towards the end of the year. But as you know us, we are doing everything we can to recruit the trial even against the backdrop of a pandemic. And events happen at the rate that they do. So there's nothing we can answer. But obviously, we are encouraged by, I think, sort of what we're seeing both in terms of the recruitment and in terms of the event rate and I think we'll be able to communicate the timing of an interim towards the end of the year.

Our next question will come from the line of Alan Carr from Needham. You may begin.

I'm looking at the sequence of events in terms of bringing on the sales force and it was only - it looks like a few days before, I notice from the FDA. I guess, maybe you can go through how you plan to leverage this growth if there is a meaningful delay beyond the PDUFA date to approval?

I think full year, but I assume that you have in terms of the activity of the strategic account managers. For us, I think there's really big value in verifying in the field all the things that I think we have been able to collect from thought leaders and surveys and everything else. And that's a worthwhile activity that really helps us plan for launch. Once we receive any more the further feedback from FDA, we'll have to see what the delay is and what - given how it makes sense, obviously, to continue that. But right now, I'm actually very proud of the whole team. I think what they're able to do, not just in terms of virtual meetings, but in fact, in terms of face-to-face meetings with the nephrologists in the office and getting really high-quality information on their awareness of the disease, I think that is incredibly valuable. We'll continue to do that, and I'm excited about it.

You would also - I think it was on the last quarterly call where you all had proposed a change to your sales force strategy. You cut back a number of people and more of a virtual focus. I know it's somewhat premature to have an assessment of how that's going because the drug hasn't launched yet. But do you have a maybe a preliminary assessment of how that's going, the strategy of going virtual rather than with a reduced force? Any thoughts on that at this point?

Yes. I think, first of all, I think we are quite happy that we have the 40 strategic account managers on board and now 80, given the potential for FDA delays. And then I think from an activity perspective, we were surprised to see how many office visits they were able to do plus also a lot of virtual interaction and with a really good reach. So we believe that this is really a meaningful size of a sales force at a minimum for the pre-launch activities and all arguably if the drugs get approved, we could actually launch with that. But you're right, it's a bit early, and we've got to see - they have noticed that really some of the additional COVID-19 pressure recently. It's a changing landscape in terms of the ratio of office and virtual. And we got to keep an eye on that.

[Operator Instructions] Next question will come from the line of Graig Suvannavejh from Goldman Sachs. You may begin.

Yes. Maybe I'd like to just revisit kind of your expectations around time lines for the possibility that you may get a complete response letter? And just want to confirm that your expectation is that in terms of the playbook, my understanding is you have like 10 days to respond or request a meeting with FDA? And then I think on my earlier - in your prepared comments, you said it - you should be able to hope to get a meeting with FDA within the next 30 days. I just want to confirm that it's 30 days and not 60 days. And again, I don't know FDA working on that well, but just want to confirm that you're thinking that's it's 30 days. And then just beyond that, when are you thinking that you might be able to come back to update the market on next steps? And then I've got a follow-on to that, please.

Graig, I think you're understanding is correct. I think the most likely response we expect is a complete response letter. We push to respond as quickly as possible and send in the Type A meeting request and the briefing book to address any potential issues noted in such a potential letter, and it is not 60 days in a Type A meeting, so 30 days. Our expectation would be to read the letter and then basically form an opinion on our disclosure strategy and timing thereof. I think in the absence of knowing any of the potential deficiencies or issues, it's very difficult to guess in terms of timing and what meets the threshold, obviously, to disclose.

Okay. And then my follow-up question, I was reading through the press release, I was struck by the language that you are preparing for all eventualities to swiftly resolve any potential issues. So I guess is there any additional color you can provide on specifically what you're referring to when you're preparing for all eventualities? Or is it simply more just a philosophical mindset that you just have to wait and see and then you'll activate accordingly?

No, I mean, you know us, we are prone to overpreparing and overthinking. And we are basically trying to get all of our information and topics in order so we can only basically respond to any issues that they would bring up. So we're not waiting by the mailbox. We are made to be actively sort of thinking through what potentials there are and how we could quickly respond. We feel real sense urgency to really work collaboratively with FDA to overcome any of those potential deficiency that they might put into a potential thereof.

[Operator Instructions] I'm not showing any further questions on my end.

Great. Well, we'd like to thank you all for joining us today. As always, if you have additional questions, please don't hesitate to e-mail us at ir@tricida.com. Thank you and goodbye.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.