Tricida Inc  (NASDAQ:TCDA)
Q4 2018 Earnings Conference Call
March 28, 2019, 8:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

See all our earnings call transcripts.

Prepared Remarks:

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Operator

Good day, ladies and gentlemen, and welcome to the Tricida TRCA-301E Clinical Trial Results and Financial Results Conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. (Operator Instructions) As a reminder, this conference call maybe recorded.

I would now like to introduce your host for today's conference, Ms. Jackie Cossmon. Ma'am, you may begin.

Jackie Cossmon -- Vice President of Investor Relations and Communications

Thank you. Good morning, and thank you for joining the Tricida Conference Call. In today's call, Gerrit Klaerner, our CEO, President and Founder will discuss the TRCA-301E Clinical Trial Results that we announced this morning as well as our business progress. Geoff Parker, our CFO, will then discuss our upside debt facility with Hercules, our financial results for the quarter and full year 2018 and provide an overview of our financial outlook.

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 statements regarding our future development plans, recruitment milestones, planned NDA submission, financial guidance and other statements that are not historical facts.

Management's assumptions, 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 applied 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 releases that were issued prior to this call, please go to tricida.com and follow the link to our Investor Relations page.

At this time, I would like to turn the call over to Gerrit.

Gerrit Klaerner -- Chief Executive Officer, President and Founder

Thank you, Jackie, and thank you all for joining us today. We previously reported that the expected results of our 301E extension trial in the first half of 2019. I am pleased to report that we now have the results of the trial and that it met its primary and all secondary endpoints.

Earlier today, we issued a press release that provides greater detail concerning the design of and the data generated in the trial. Before I walk you through the results, I want to highlight the fact that we saw a surprising upside, beyond the expected good safety profile, and long-term durability of effect of TRC101 on the surrogate blood bicarbonate endpoint.

Following 52 weeks of treatment, we have observed evidence of clinical benefit in TRC101 treated subjects, including reduced all-cause mortality, slowing of CKD progression and improved physical function. These observations are in line with the underlying pathophysiology of metabolic acidosis and its impact on bone, muscle and kidney health.

The 301E trial was a blinded 40-week extension of the 12-week 301 trial, which randomized 217 patients with non-dialysis dependent CKD and metabolic acidosis. 196 subjects containing of -- consisting of 114 subjects in the TRC101 group and 82 subjects in the placebo group elected and were qualified to continue in the extension track.

Let me start with the fact that we observed the clean safety profile for TRC101. The primary endpoint of the 301E trial was the assessment of the long-term safety profile of TRC101 versus placebo. We observed fewer discontinuations, fewer serious adverse events and a comparable rate of GI adverse events on TRC101 versus placebo.

Specifically, 2.6% of TRC101 versus 9.8% of placebo treated subjects discontinued prematurely. The incidence of serious adverse events was 1.8% in the active group versus 4.9% in the placebo group, and no serious adverse events were assessed to be related study drug.

Gastrointestinal adverse events occurred in 21.4% of patients in the TRC101 group and in 25.9% of patients on placebo group. We observed a sustained increase in blood bicarbonate in TRC101 treated patients. Two of the four secondary endpoints assessed the durability of effect of TRC101 by comparing the changes in blood bicarbonate between active and placebo treated subjects who completed the 52-week treatment period.

63% of the active subjects exhibited an increase in blood bicarbonate level of at least four milliequivalents per liter or achieved a blood bicarbonate level in the normal range compared with 38% of placebo subjects. This represented a P value of 0.0015. The mean change in blood bicarbonate from baseline to end of treatment in the TRC101 group was 4.7 mEq/L compared with 2.7 mEq/L in the placebo group, representing a P value of 0.0002.

The final two secondary endpoints evaluated how treatment with TRC101 might affect how patients feel and function. If you recall the basic physiology behind metabolic acidosis, a buildup of acid can contribute to reduce muscle mass and impaired physical function. Physical function were assessed indirectly through the self-reported responses to the KDQOL Physical Functioning Survey and measured directly through a repeated chair stand test.

Let me return, the placebo-adjusted improvement in favor of TRC101-treated subjects in the two measures of physical function at Week 52 were both highly statistically significant for the P value of less than 0.0001 and approximately doubled compared to the observed results at Week 12.

We believe the results from the KDQOL Physical Functioning Survey and the repeated chair stand test both provide evidence of improvement in physical function and these placebo-adjusted effects exceed the minimally clinically important different thresholds reported in the scientific literature.

As you can tell I can't wait to get to this next part that really deals, but one of the most unexpected and exciting results of this trial. We included a prespecified comparison of the TRC101 and placebo groups for the time to the composite clinical endpoint of all-cause mortality, dialysis or a greater equal 50% decline in eGFR.

We refer to this as a DD50 event over the combined 52-week treatment period, the annualized DD50 incidence rate was 4.2% in the TRC101 group versus 12% in the placebo group. This represents a statistically significant P value of 0.0224. There were no deaths in the TRC101 group and four placebo patients died.

Each group had one subject initiated dialysis. Although the 301, 301E clinical trials were not designed or powered to assess all-cause mortality or the progression of CKD outcomes, we nevertheless observed a 65% reduction in the annualized DD50 event rate for TRC101-treated subjects versus the placebo group.

So, let me sum up where we are based on our topline analysis of the extension trial. The combined 52-week results far exceeded our expectations. We did not anticipate that we would observe any evidence of clinical benefit beyond the increase in blood bicarbonate in patients treated with TRC101 until the read out of our VALOR-CKD postmarketing trial somewhere in the '22 to '23 timeframe.

We remain committed to submitting our NDA under the accelerated approval program in the second half of 2019 and look forward to the results of our VALOR-CKD confirmatory postmarketing trial. While we do not anticipate any change to the size or design of the VALOR-CKD trial. We feel good about what we've learned in the 301E study regarding safety and efficacy, increasing our confidence for successful VALOR-CKD trial.

Just as a reminder, the ongoing VALOR-CKD trial is a time-to-event study. Subjects will be followed until we have approved the target number of primary endpoint events, which we estimate will be approximately four years following full enrollment.

Our sample size of 1,600 subjects is based on the assumption of a 30% to 35% reduction in renal event. Furthermore, the protocol specifies an interim analysis, when at least half the planned number of primary endpoint event have been approved, which we estimate will be approximately two to three years after full enrollment.

At such time, the trial maybe stopped early for efficacy, the sample size maybe increased or the trial may continue without changes. We have now successfully completed all the clinical trials that we plan to complete prior to submission of our NDA through the FDA's accelerated approval program. We are on track for this submission in the second half of 2019.

Next, I would like to highlight the publication of our Phase 3 TRC101 clinical trial results in The Lancet, a leading independent general medical journal. This is an important milestone for Tricida and shows that interest in metabolic acidosis extends beyond the nephrology community. I would like to thank our Tricida authors and our key opinion leaders Drs. Wesson, Bushinsky, Tangri and Mathur.

Now, I would like to provide an update on our DDI studies. Our drug-drug interaction studies were guided by the underlying mechanism of action of TRC101, our in vitro studies and FDA interactions, and we determined it was appropriate to evaluate aspirin, dabigatran, furosemide and warfarin in Phase 1 clinical trials for potential DDI effects.

Based on the results of our DDI studies, we do not believe we need to recommend dosing separation for any drugs co-administered with TRC101.

Before I turn the call over to Geoff, let me say, how pleased I am to welcome Susannah Cantrell to Tricida as our Chief Commercial Officer. Susannah comes to us with over 20 years of commercial industry experience across sales, operations, marketing and global commercial strategy, including executive and senior level roles at Gilead, Genentech/Roche and GSK.

Susannah has launched multiple successful therapeutic products at Gilead and Genentech and she brings the breadth and depth of strategic and operational experience to Tricida and has already hit the ground running. Our pre-launch activities on the way including operational logistics, managed market activities, physician surveys, patient journey analysis, refined healthcare economic analysis and much more. We are truly delighted to have Susannah joined the team. And now I'll ask Geoff to discuss the new Hercules amendment, which we were also pleased to announce this morning as well as to provide you with a financial update and our cash guidance for 2019.

Geoffrey Parker -- Chief Financial Officer and Senior Vice President

Thank you, Gerrit. Before I turn to the financial results, I would like to echo Gerrit's excitement regarding the positive 301E results. We recognized that these compelling results could have warranted an independent call, but we wanted to update you at the earliest possible time, which happened to coincide with our financial results call.

Let me now turn to our financial highlights. I am pleased to report that we have completed an amendment to our Hercules debt facility. This amendment increases the total amount available under our current debt facility to upto $200 million and significantly extends the maturity of the facility.

The key strategic advantage to this new facility is that it extends our financial runway such that we are now able to fund our operations into 2021, which would cover the initial commercial launch period of TRC101. Under the terms of this amendment, the $40 million currently drawn under the existing debt facility with Hercules remains outstanding.

Additional tranches of $20 million and $15 million are available for draw-down prior to December 15, 2019 and December 15, 2020 respectively. An additional tranche of $75 million will be available for draw-down prior to December 15, 2020 subject to FDA approval of TRC101. A final tranche of $50 million will be available for draw-down prior to December 15, 2021 subject to approval by Hercules.

The final maturity date of the amended debt facility is initially four years from closing and can be extended to five years subject to the FDA approval of TRC101 and the -- when the final tranche is drawn. Let me now turn to our financial results for 2018 that we reported today.

Research and development expense was $22.7 million and $17.8 million for the three months ended December 31, 2018 and 2017 respectively and $85.6 million and $35.9 million for the years ended December 31, 2018 and 2017 respectively.

The increases in research and development expense in the three month and full year period of 2018 compared to the prior year were primarily due to increased activities in connection with our TRC101 clinical development program, including increased drug substance manufacturing as well as increased personnel and related costs.

General and administrative expense was $6.1 million and $2.9 million for the three months ended December 31, 2018 and 2017 respectively, and $18 million and $11.2 million for the years ended December 31, 2018 and 2017 respectively.

The increases in general and administrative expense in the three months and full year periods of 2018 compared to the prior year were primarily due to increased administrative costs supporting the increased activities in connection with our TRC101 clinical development program, including increased personnel and related costs and other G&A expenses.

Net loss was $27.8 million and $20.6 million for the three months ended December 31, 2018 and 2017 respectively, and $102.8 million and $41.3 million for the years ended December 31, 2018 and 2017 respectively. As of the end of 2018, cash, cash equivalents and investments were $243.4 million.

Let me now turn to our financial outlook. With regards to financial guidance for 2019, we estimate that cash expense will be between $135 million and $145 million. As I previously stated, we expect that our cash and investments as of the end of 2018 together with our borrowing capacity under our amended Hercules debt facility will enable us to fund our anticipated operating expenses and capital expenditure requirements into 2021, which would cover the initial commercial launch period for TRC101.

Operator, we are now ready to open the call to questions.

Questions and Answers:

Operator

Thank you. (Operator Instructions) And our first question comes from Jessica Fye from JPMorgan. Your line is open.

Jessica Fye -- JPMorgan -- Analyst

Hi, there. Good morning. Thanks for taking my questions. I wanted to ask about the placebo arm and the trial in the extension phase. It looks like they sort of did a little bit better than in the original portion of the study. Can you talk about why that might be the sort of effective at being a completers group of placebo patients?

Gerrit Klaerner -- Chief Executive Officer, President and Founder

Thanks, Jessica. Yeah, it's exactly. You only look at the ones that actually complete 52-weeks. And, of course, they did not do really well because four of them died and many more actually progressed in terms of dialysis. But the serum bicarb result is basically impacted because we only look at the ones that complete 52-weeks and when one group hardly anybody drops out and a lot do drop out in the other that's where the imbalance comes from.

Jessica Fye -- JPMorgan -- Analyst

Okay, great. And can you also help us think about the mix of components of the endpoint in the outcomes trial. You know here we had some deaths, some dialysis and dialysis initiation et cetera. Can you talk about how you expect that kind of mix of endpoints to play out longer term?

Gerrit Klaerner -- Chief Executive Officer, President and Founder

Yes, I think, we -- obviously, as you know, we did, you know, a multicenter blinded extension trial with the placebo group where we wanted to confirm our surrogate effect in terms of efficacy and safety.

So, the events that we looked at were pretty hard clinical outcomes. All-cause mortality, dialysis and losing 50% of the kidney functions. And that's really sort of, you know, from the safety considerations and then we saw the surprising difference in just one year.

In our VALOR-CKD trial, we obviously have a traditional time-to-event analysis, where we are looking at not all-cause mortality, but renal death, dialysis and a 40% eGFR reduction that occurs more frequently than 50% really.

So, really what we are reporting here out of our safety observations in the prespecified analysis, those are quite frankly even harder endpoint than VALOR-CKD, but they make us feel pretty good that, I think, you know, metabolic acidosis causes death and renal progression.

Jessica Fye -- JPMorgan -- Analyst

Okay, got it. And did you analyze this data based on the 40% alone?

Gerrit Klaerner -- Chief Executive Officer, President and Founder

No.

Jessica Fye -- JPMorgan -- Analyst

Okay. And just one last one, the causes of the deaths here. Do they appear to be kidney disease related?

Gerrit Klaerner -- Chief Executive Officer, President and Founder

Yes, one was actually renal death and that defined as, you know, a patient who basically refuses dialysis. And another one had significant eGFR reduction, before the patient died. But under the VALOR-CKD definition, one of the four was renal death.

Jessica Fye -- JPMorgan -- Analyst

Okay. Got it. Thank you.

Operator

Thank you. (Operator Instructions) And our next question comes from Laura Christianson from Cowen. Your line is open.

Laura Christianson -- Cowen and Company -- Analyst

Hi, guys. Thanks for taking my question and congrats on the data. I just want to hone in a little bit on what you mentioned briefly about the drug-drug interaction studies. You mentioned no need for dose separation for any drugs co-administered. Is that what you will have in the protocol for VALOR-CKD as well and how do you expect that to influence the tolerability of the drug if at all?

Gerrit Klaerner -- Chief Executive Officer, President and Founder

Yes, the VALOR-CKD study started before we had completed all of our DDI studies. So, that's a different cup of tea, but I think from an NDA submission perspective that's a conclusion that we will just basically submit in our NDA.

Laura Christianson -- Cowen and Company -- Analyst

Got it. Okay. And when I know you've already kind of rehashed the estimated pricing based on conversations with payors. Do you anticipate that changing at all with the results that you've released today with the composite endpoint?

Gerrit Klaerner -- Chief Executive Officer, President and Founder

Yes, I think, you know, there is a big difference between time, people to extrapolate our results to outcomes and having outcome results. It's as simple as that.

And we think that the data that we have in the small study is really a paradigm shift in terms of the understanding of metabolic acidosis and potential treatment with TRC101. So, we are obviously, you know, we are very data driven and we'll have discussions with payors.

But, as you know, there are not many cardio renal trials that have shown multiple positive outcomes ranging from reduced all-cause mortality to reduced progression of kidney disease and the patients feel and function better. So, yeah, we think that, that's going to move the needle.

Laura Christianson -- Cowen and Company -- Analyst

Great. That's helpful. Thanks.

Operator

Thank you. And I am showing no further questions from our phone line. And I would like to turn the conference back over to Gerrit Klaerner for any closing remarks.

Gerrit Klaerner -- Chief Executive Officer, President and Founder

Thank you, operator, and thank you all for joining us today. We are very pleased to be able to share real time the 301E data with you on today's call. We'll be reviewing this further with our key experts. We also plan to submit these results for publication in a major medical journals. We have significant work ahead of us to submit our NDA, expand our disease awareness campaign and initiate our commercialization plan. Given these results, we are more eager than ever to have physicians, patients and payors understand the value of treating metabolic acidosis. We look forward to updating you on our progress and as always if you have questions, please don't hesitate to call Jackie. Thank you and goodbye.

Operator

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program. You may all disconnect. Everyone have a wonderful day.

Duration: 24 minutes

Call participants:

Jackie Cossmon -- Vice President of Investor Relations and Communications

Gerrit Klaerner -- Chief Executive Officer, President and Founder

Geoffrey Parker -- Chief Financial Officer and Senior Vice President

Jessica Fye -- JPMorgan -- Analyst

Laura Christianson -- Cowen and Company -- Analyst

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