TCDA (2021 - Q1)

Good day. Thank you for standing by and welcome to Tricida First Quarter 2021 Financial Results Conference Call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question-and-answer session. Please be advised that today's call is being recorded. Thank you. I'd now like to hand the conference over to your speaker today, Ms. Jackie Cossmon. The floor is yours. Jackie C

Thank you, Alex. Good afternoon, and thank you for joining the Tricida first quarter 2021 financial results and business update conference call. In today's' call, Gerrit Klaerner, our Founder, CEO and President will discuss an update on our ongoing VALOR-CKD study, potential for near term data based on first pre-specified interim analysis for early stopping for efficacy and our strategy for re-engagement with the FDA. Geoff Parker, our COO and CFO, will then discuss our upcoming business activities and financial results for the first quarter and review our financial guidance.

Thank you, Jackie, and thank you all for joining us today. Our primary focus this year is on the continued execution of the VALOR-CKD renal outcomes trial which is designed to assess whether veverimer can slow kidney disease progression in patients with metabolic acidosis and CKD. Given the complete response however, that we received last August, and the Appeal Denied Letter from the FDA Office of New Drugs, which we discussed at length earlier this year, we believe the optimal path forward for the potential approval of veverimer is to provide additional data to the FDA from an ongoing outcomes trial. We believe that positive data from VALOR-CKD on the veverimer's ability to slow CKD progression or improve physical function would enable a productive discussion with the agency. I'll talk about our plans to engage with the FDA shortly, but first, let me provide an update on our trial progress. On Slide 3, as a reminder, VALOR-CKD is a randomized double-blind placebo-controlled trial that is designed to enroll 600 subjects. The primary endpoint of the trial is to time to first occurrence of DD40, defined as renal death, ESRD, or confirmed 40% reduction in eGFR. The protocol includes two pre-specified interim analyses for early stopping for efficacy. Interim one will occur after 150 events and interim two will occur after 250 events. If the criteria for early stopping are not met, the trial is scheduled to conclude when the independent unblinded endpoint adjudication Committee has positively adjudicated 511 DD40 events. The trial was designed with 87% power to show a 24% difference in primary endpoint events. That's another way that assumed hazard ratio for the powering of the VALOR-CKD trial is 0.76.

Thanks, Gerrit. And thank you all for joining us today. Before I provide a summary of our financial results, I'd like to discuss our ongoing activities to further understand the market opportunity for veverimer. Turning to Slide 11, there are approximately 3 million people in the US with CKD and metabolic acidosis. As previously stated, if VALOR-CKD meets its primary endpoint, we are looking at a potential indication of slowing CKD progression through treatment of metabolic acidosis. In our prior market opportunity analysis and commercial launch planning, our target market focused primarily on the 600,000 patients treated by nephrologists. However, we would now also like to better understand how the broader HCP community, including primary care physicians, cardiologists and endocrinologists, might utilize a product with veverimer's product profile, assuming we have outcomes data on slowing CKD progression at launch. We'd also like to understand the rate of adoption of veverimer with data based on outcomes at launch, relative to our prior assumptions of adoption, assuming accelerated approval based on a surrogate endpoint. Therefore, we are conducting new surveys with nephrologists to further explore their attitudes and priorities for treating metabolic acidosis in patients with CKD. And we are serving primary care physicians, cardiologists and endocrinologists to better understand how a product with veverimer's target profile would fit into their treatment paradigm for their patients with metabolic acidosis and CKD. We believe this updated market research will be critical to understanding HCP's willingness to use veverimer if it is approved with outcomes data on slowing CKD progression. On Slide 12 I'd also like to remind you that we have a broad patent estate, which includes composition of matter in the US that provides protection to 2038 and broad patent protection outside the US. Now turning to our financial results on Slide 13; R&D expense was $32.2 million dollars and $49.4 million for Q1 2021 and 2020, respectively. The decrease in R&D expense was primarily due to decreased activities in connection with our veverimer clinical development program related to manufacturing process optimization, and the manufacturing of drug substance and lower personnel costs. G&A expense was $9.9 million and $23.5 million for Q1 2021 and 2020, respectively. This decrease in G&A expense was primarily due to decreased administrative activities in connection with our veverimer clinical development program, including pre-commercialization, medical affairs and personnel costs. Net loss was $53.4 million and $74.1 million, and non-GAAP net loss was $38.3 million dollars and $63.8 million for Q1, 2021 and 2020, respectively.

Your first question comes from the line of Joseph Stringer from Needham Company. Your line is now open.

Hi everyone, thanks for taking our questions. Can I go back to this trial side - a question about trial site overlap between VALOR-CKD and the 301 studies, in particular, in Europe and in Eastern Europe. Can you remind us what the split - more generally, what the split US to EU is for each of those? And in Europe, what the percent overlap in sites were? And I have a couple follow ups to that.

Yes, I think the vast majority in the 301/301E trial were Eastern Europeans, I think it was around 80% or so. And we expect ultimately, Eastern Europeans also represent about two-thirds in the VALOR-CKD trial. The overlap of the sides, I think the differences is that we almost have 10 times more sides in VALOR-CKD. Remember 301/301E, 217 subjects, and I think it was 143 to 145, and here we're talking 305, a truly global study. And again, about two-thirds of those in Central and Eastern Europe.

Okay, thanks. And then, as a follow up to that, in terms of FDA is concerned about a single high enrolling site, and you're still randomizing patients in VALOR-CKD. I'm just curious, were there any steps taken to minimize given that there is some overlap in sites, especially in Eastern Europe? Just to mitigate maybe a side or two that was - there was a high roller in 301? Or is there anything that couldn't be done or has been done in VALOR-CKD to sort of mitigate that that risk?

Yes. I think we are mitigating this by ensuring there's no site that's recruiting more than 5% of the patients.

And is that something that - you put in place those entry restrictions, enrollment restrictions more recently, or was that something you had in mind - maybe take us through the timing of when those 5% restriction was put into place?

Yes, in general, I think we knew that this was going to be - VALOR-CKD a larger, more global trial, with more sites. And let's be clear, we started VALOR-CKD in 2018 and we got RCO in 2020. So just to fix the timeline, FDA obviously had us started the outcome trial well before the initial NDA submission. But, even with that, not knowing the issue, I think we had so many sites that we didn't have anyone that recruited a larger number of subjects. And we're handling this on the clinical operations level, which is quite customary.

Okay, great. Thanks for taking our questions.

Next question is from Jessica Fye from JP Morgan. Your line is now open.

Hey. Thanks for taking my question, just following up on some of your comments from prepared remarks and maybe slightly related to the past line of questions, given the demographics of the patient enrolled in the VALOR study thus far, and therefore the likelihood, as you mentioned, that Eastern European patients will account for many of the events in these upcoming interims. Can you elaborate on how you think the FDA would interpret that data as evidence of the drug's effect?

Yes, I think when you look at - and we've analyzed renal outcome trials and renal trials in general, it's quite common to have the majority of the subjects come from Eastern Europe, we don't believe that they're that different. We are not aware that any outcome trials are powered to deliver certain results in certain regions. But we are also very mindful, I think, of FDA's concerns. So our approach is, obviously - we have a very tight and clear inclusion-exclusion criteria, we understand the disease at baseline. That's one thing, and we've said this many times, and we feel very, very good about this. Now, experts feel good about this too. And then, I think we also looking at an explanation of some variability that can occur among patients, and quite frankly, between patients in Florida and California, or patients in the Republic of Georgia, State of Georgia. And we are working on an approach where we can explain some of that variability and respond to veverimer on the basis of the underlying pathophysiology of acid base balance and normalization, and also in terms of what our clinical data will show. So we feel that the data from the territories that we are recruiting from is informative and applicable to the US patients. We're not just repeating the same argument we've made with FDA before, but we're supplementing it with explaining the expected variability in response to acid base correction in various patients, from various territories.

Okay, got it. And maybe just one more quick regulatory question. With respect to the possibility of a resubmission in a shorter review period, do you know if the resubmission has to happen within a certain timeframe after the original CRL to be eligible for that shorter review period? Or if you resubmit even over two years later, you still eligible for that, like, six months review?

I'm not aware of any time - expiring of timeframe for that. But obviously, as we said, that needs to be discussed with FDA in the context of new data and the resubmission. But again, we believe that this is - I think FDA mentioned in the CRL, obviously, the avenue of providing full data from an outcome trial, an outcome trial is not something that takes weeks and months. It's understood that that takes years.

Next question is from Laura Christianson from Cowen. Your line is open.

Hi, thanks for taking my question. I was just wondering if you could remind us exactly how you're estimating the timeline for the accrual of the primary endpoint events, and just what error bars are around timing of the first and second interim analyses?

Yes, I'm glad you asked about this, because we're excited about the increased event accrual, and that's really driving, I think sort of key milestone of the potential near-term data. And the forecast of the event rate is really from a control group of multiple trials, 29 CKD trials and total of 2200, roughly, subjects, and that participated with a similar inclusion exclusion-criteria, specifically matched for eGFR. And that's how we generated that. Again, those are --some of the trials are a little bit older. But I think they're relevant and it's always good to be actually tracking now that we have a good number of events, so we think this is quite meaningful. And obviously, we hope that we stay on track so that we can have the interim one this year and interim two next year.

And I noticed you extended your cash runway relative to the last earnings report, and now you're saying through late 2022, is there potential to extend the cash runway further and what is - I'm just trying to think about when you might expect to perform an administrative stop for the trial?

So, the extension of the runway, of course, was directly linked to the amendment with Pantheon. So that was a $48 million savings, if you will, in the relevant 2021, 2022 timeframe. As far as extending the runway, of course, we're going to look at all of our expenses with the VALOR-CKD trial being our crown jewel, and something that we want to not spare any expense on. But there are other areas that we may look at, it's premature to say what those savings could be. But there may be opportunities to extend the runway beyond the end of 2022, independent of any financing. And I'll turn it to Gerrit to finish the answer.

Yes, I think it has to be clear, our goal is to conduct the VALOR-CKD study for the protocol and to get to 511 events. And I think we want to be very clear that administrative stop is not currently something that we are planning for. It's something that we will consider at the time when we have to. And so, that's why we want to be really cautious to not talk about any potential timing, because, again, we hope to enable the completion of VALOR-CKD and the interim analyses - the successful interim analyses, at least. So, again, I think that will be a discussion at the time we make the decision to administratively stop.

Okay, so you're still hoping to get to 511 events and hoping that maybe you can extend the cash runway to get there?

Yes, I think, ultimately, that always has to be the goal, we are actively recruiting patients, into the study and they're signing up for the VALOR-CKD as we outlined in the protocol, and that has to be our goal.

Your next question is from Graig Suvannavejh from Goldman Sachs. Your line is now open.

Hey, good afternoon. Thanks for taking my questions, I've got two. My first, maybe it's because my memory is not so good these days, but can you provide me the reminder of - when you did the amendments to your clinical trial program, did you provide that feedback? Or did you provide feedback to the FDA and have they directly responded with a view of the changes you made and how you plan now to analyze the data with the two interims? So, I'm just asking about where FDA stands on the changes to the current plan to get the veverimer approved. And then my second is more of a clarifying question with respect to the cash runway and the potential administrative stop to the trial. I just want to understand the dynamic that you've been able to - and nice job, Geoff, on extending the cash runway, but there's a potential that you would consider than administrative stop before or during the interims? And if you have cash to the end of 2022, I'm just trying to figure out why you would have to be in a position to consider an administrative stop? And maybe I'm just missing something, so apologize for the question.

I think from an FDA perspective, of course, whenever you make a protocol when you submit to FDA and if you don't hear within 30 days, you proceed. That's what we've done. We haven't received any additional feedback on the interim analyses. And quite frankly, the amendment was based on an FDA letter from last year, from July, I think, 29th, that discuss that very topic, and we followed what they suggested. So while we didn't get specific feedback, we did follow the standard procedure of protocol, submissions of protocol amendment and we also informed the FDA that we are obviously conducting and continuing the study per that protocol amendment number two, currently. And as new things evolve, obviously, we'll engage. And then, on the administrative stop, again, I think this will be a discussion at the time. I think looking at a bunch of different things including one way balance sheet strength and so on, I think we will look at the need for and the timing of a potential administrative stop.

You don't have any more questions at this time. You may continue, presenters.

Thank you, Alex. And thank you all for joining us today. As always, if you have additional questions, please don't hesitate to email us at IR at tricida.com. Thank you and goodbye.

This concludes today's conference call. Thank you for participating. You may now all disconnect.