TCDA (2021 - Q3)

Ladies and gentlemen, thank you for standing by, and welcome to the Tricida Third Quarter 2021 Financial Results Conference Call. I would now like to turn the call over to our speaker today, Jackie Cossmon of Tricida. You may begin. Jackie C

Thank you, Marjorie. Good afternoon, and thank you for joining the Tricida Third Quarter 2021 Financial Results and Business Update Conference Call. In today's call, Gerrit Klaerner, our Founder, CEO and President, will provide an update on the ongoing VALOR-CKD renal outcomes trial and discuss our business progress. Geoff Parker, our COO and CFO, will discuss our financial results for the third quarter and review our financial guidance. 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 our anticipated activities related to our ongoing VALOR-CKD renal outcomes clinical trial, including early termination of the trial and our expectations regarding our financial runway. 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 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. We issued our third quarter financial results press release this afternoon just after the close of market. For copies of our press release, 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, Jackie, and thank you all for joining us today. I'd like to first turn to our announcement today regarding our plans for future administrative stock of VALOR-CKD. We have spoken previously about potential need to stop the trial early based on insufficient financial resources. As you saw in the press release, we believe that there is a substantial likelihood that we will not have adequate resources or be able to obtain such resources on reasonable terms in a necessary time frame to continue VALOR-CKD to reach the current target of 511 subjects with positively adjudicated primary endpoint events, which we anticipate would not be reached until 2024. As such, we have considered various options to terminate VALOR-CKD early. Tricida requested and was granted a Type A meeting with the FDA to discuss the approaches to stopping the trial early based on financial resources and the procedures for study close out. We believe that we received clear and thoughtful feedback in the FDA's preliminary comments, which allowed us to cancel the actual Type A meeting. Among the alternatives considered, as FDA indicated that stopping VALOR-CKD for administrative reasons pursuant to the existing protocol is likely to provide the most complete and interpretable data, reduce the risk of missing data required for key efficacy analysis and maintain the integrity of the trial. While the exact timing of the administrative stop will be determined by our financial runway, we anticipate that administrative stop will occur in the first half of 2022. Our goal is to have approximately 6 months of financial runway upon the receipt of the VALOR-CKD data. Also based on feedback from the FDA, we will hold enrollment of additional patients in the trial in order to focus resources on maximizing the duration of follow-up and subjects who are currently enrolled in the trial. I would like to emphasize that the timing for stopping the trial has not yet been determined. We are evaluating our financial runway and should have additional information on when we will stop the trial as we move into the new year. We believe that even with an early termination, we can address the most important VALOR-CKD trial objectives. We've made good progress to date in the accumulation of primary endpoint events and intend to continue our focus on successful execution of the trial. As a reminder, VALOR-CKD renal outcome trial designed to show that treating metabolic acidosis, the very American slowed CKD progression. The primary endpoint of the trial is the first, the time to first occurrence of a confirmed DD40 event, the final is renal death, ESRD integrated to 40% reduction in EGFR. We've made very good progress in the trial. To date, we have randomized over 470 subjects with an average treatment duration of approximately 19 months. We have accrued 159 subjects with positively adjudicated primary endpoint events. This puts us on track with our event rate projections and we still anticipate that we will reach 250 subjects with primary endpoint events by approximately mid-2022. However, we anticipate that an administrative stop would occur in the first half of 2020. Accordingly, we are not likely to conduct the protocol-specified 250-event interim analysis. Overall, we remain excited about the prospects of VALOR-CKD. Given the results from prior lecture in our own studies, even with a fewer number of primary endpoint events that are originally contemplated, we believe that we have a chance to reach our main trial objectives. First and foremost, our goal is to show slowing our progression of chronic kidney disease with veverimer. With that, I'll turn the presentation to Geoff for an overview of our financial results for the quarter.

Thanks, Gerrit, and thank you all for joining us today. Our third quarter results were in line with our expectations, with R&D expense of $26.6 million and $43 million for the 3 months ended September 30, 2021 and 2020, respectively. The decrease 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. G&A was $9.1 million and $29.3 million for the 3 months ended September 30, 2021 and 2020, respectively. The decrease 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 $39.7 million and $77.7 million, and non-GAAP net loss was $30.7 million and $64.3 million for the 3 months ended September 30, 2021 and 2020, respectively. As of September 30, 2021, cash, cash equivalents and investments totaled $146.8 million. We have a $200 million 3.5% convertible senior note outstanding with a maturity date of 2027. At September 30, 2021, we had approximately 50 million shares outstanding. We believe our current financial resources will fund our planned operations through 2022. We will, however, continue to evaluate our financial runway over the next several months as we consider the timing for the administrative stop of VALOR-CKD in the first half of 2022. As Gerrit has indicated, we plan to make a decision on the time frame for stopping the trial as we move into the new year. With that, I will turn the call over to the operator for questions. Operator?

Our first question comes from the line of Jessica Fye from JPMorgan.

This is Daniel for Jessica Fye. First, could you elaborate for us how stopping the trial early would reduce the risk of missing data required for efficacy analysis?

Yes. This is Gerrit, Daniel. No, I think there's always when you stop a trial early, there's risk of not capturing all the information that was collected in the trial and to create bias. So I think what this is meant to say that within the scenario of an early stop we are working on procedures and have input from FDA in regards to how to best minimize the chance for bias and to maximize the interpretability of the data, and that includes such activities as really sort of minimizing missing data.

Okay. I don't know if there is a good way of phrasing it, but it seems that like you could improve your success to push the trial at least a little closer to completion. And I'm sure it's possible that their investors would feel more comfortable in investing behind those lots of success where the trial allowed to run longer. Is that an option in your mind raising additional capital to run the trial longer if not all the way to completion.

This is Geoff. I would just emphasize again that we remain comfortable with the progress of the trial, and we remain comfortable that given our expectations for the performance of the trial that even with 6 months of cash remaining at the result -- receipt of the data, we should be in a good position. So as of now, we're very comfortable with our financial position and what that can lead to in getting the readout on VALOR-CKD.

Okay. And last one. Gerrit, you mentioned that this will be able to address the most important objectives. Can you elaborate for those -- for us what those objectives are?

Yes. Really, that means that we hit the primary and secondary endpoints of the trial.

Our next question comes from the line of from Cowen.

Congrats on the alignment with the FDA. So my question is about the event rate. Has it so far still been tracking with the estimated event accrual time line based on your internal forecast? And will it -- is it continuing to look linear even as patient recruitment gets to completion?

Yes. Thanks for the acknowledgment of really, I think, aligning with FDA that, that was an important step for us on an important topic on how to facilitate the early stop and to really have a productive interaction with the FDA. So we're excited about it, and we appreciate you acknowledging it. Yes. So the events are exactly as we have forecasted. And if you go to our corporate presentation, you look at that curve, we're right on it. So that is really, really good news. And I think that we are following that projection.

And as a note, we have updated the deck. So if you go to our corporate website, Slide 15, you can see the 159 subjects that Gerrit referenced earlier is on the chart, and it’s right in line with our expectations.

Our next question comes from the line of Joseph Stringer from Needham and Company.

A couple from us. Can you just sort of update your event? In the past, you've given some nice background on hazard ratios and probabilities of stopping at various event interim analysis. Given your updated guidance today on administrative stop, has that changed in terms of the powering and sort of the probability of success based on your hazard ratios and your powering assumptions? Maybe you could provide us some updated guidance on that. And then secondly, on -- you commented that you plan to make a decision experience in terms of exactly when to stop the trial early. I guess could you elaborate a little bit more on what factors are going into that? Is it just based on cash runway? Or would you like to get to a certain number of patients, that would be helpful.

Yes. No, good question, Joseph. I think the -- all the assumptions, all statistical considerations and all the education we've done over the past sort of months, all this is still valid and applicable. But just to be clear, from a regulatory perspective and from a protocol perspective, in order to get to basically interpret all the data, even though you prespecified a certain number of events, and now you're using a smaller number of events, that number can only be driven by your financial sort of runway. So you can't sort of say, hey, I'm aiming for a certain number of events. So we are very careful to follow the protocol and the rules of an administrative stock so that we can really maximize the interpretability of the data. And -- but again, everything in our corporate presentation that is still there because it still applies. But we want to be very clear that in the context of the modalities around early stopping and is solely driven by the financials. And again, sort of we need some time because, look, I mean, I've been doing this for 20-plus years. I don't remember the last time you get preliminary written comments from FDA. And on that basis, you basically don't need the actual meeting. So this just happened. So give us some time, we were still in preparation mode for the actual Type A meeting, which now -- because we're so happy with quite frankly, the helpfulness from the preliminary written response that we are not proceeding with. And so it gives us a chance to work through all the other financial aspects that determine not the how, but the when we're going to stop.

There are no further questions at this time. Please continue, Ms. Jackie Cossmon.

Thank you. Thank you all for joining us today. And as always, if you have additional questions, please don’t hesitate to e-mail us at ir@tricida.com. Thanks again, and goodbye.

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