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Tricida, Inc. (NASDAQ:TCDA)
Q2 2019 Earnings Call
August 8, 2019, 4:30 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good afternoon, ladies and gentlemen and welcome to the Tricida second quarter financial results conference call. At this time, all partisans are in a listen-only mode. Later, we will conduct a question and answer and instructions will follow at this time. If anyone should require assistance during the conference, please press * then 0 on your touch tone telephone. As a reminder, this conference call is being recorded.

I would now like to turn he conference over to your host, Miss Jackie Cossmon. Jackie, please go ahead.

Jackie Cossmon -- Vice President of Investor Relations and Communications

Thank you, Jenna. Good afternoon and thank you for joining the Tricida second quarter financial results conference call. In today's call, Gerrit Klaerner, our CEO, President, and Founder will discuss our business progress and Geoff Parker, our CFO, will then discuss our financial results 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 statements regarding our future development and commercialization plans, the conduct of our confirmatory post-marketing trials, recruitment milestones, planned NDA submission and approval, 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 future results, performance, or achievements discussed in or implied by such forward-looking statements.

Tricida can give no assurance that these statements can prove to be correct and we do not intend or take 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'd like to turn the call over to Gerrit.

Gerrit Klaerner -- President and Chief Executive Officer

Thank you, Jackie. Good afternoon and welcome to our second quarter call. It's been an eventful quarter where we have made great progress on a number of fronts. First, we're updating and narrowing the timing for a planned NDA submission under the accelerated approval program from the second half to the third quarter of 2019 based on our recent positive pre-NDA meeting with the FDA, which included a thorough discussion of our TRCA-301E trial results.

Separately, we discussed with the FDA the significant progress that we've made in the enrollment in our confirmatory post-marketing trial VALOR-CKD. While this trial is not yet fully enrolled, the overall enrollment progress was deemed sufficient by the FDA for Tricida to plan for the NDA submission in the third quarter of 2019.

We intend to provide an update by the end of the year on our estimate for randomizing the last patients in our VALOR-CKD trial. As you know, we are pursuing initial approval under the accelerated approval program on the basis of the surrogate endpoint of serum bicarbonate increase with an ongoing post-marketing commitment to demonstrate that our surrogate endpoint translates to clinical benefit.

The pillars of our clinical program are the double-blind placebo-controlled multi-center 12-week Phase 3 and blinded placebo-controlled 40-week extension trials that have now been presented in back to back publications in The Lancet. The 301E manuscript was accepted for fast track publication based on The Lancet's commitment to get important data into the public health arena as quickly as possible.

From submission to publication, including full peer review, manuscript editing, and publication, the 301E results were published in four and a half weeks. We believe this speaks to the importance of this data. In figure two of the paper, Kaplan-Meier plot of data from the pre-specified analysis of time to composite endpoint of death, dialysis or confirmed 50% decline in eGFR is presented for the first time. It shows that more patients on veverimer survived for a longer time without a DD50 event when compared to placebo, with a survival plot showing separation in favor of veverimer starting after ten weeks.

Figure four of The Lancet shows that the veverimer-treated patients had sustained improvement in self-reported physical functions starting at week 12 that continued to week 40 and 52. The mean improvement in the veverimer group was an 11-point improvement in multiple activities, including the ability to walk multiple blocks and climb a flight of stairs, exceeding the minimal clinically important difference of a three to five-point improvement.

Figure 4B shows that objectively measured physical function assessed by the repeated chair stand test also improved on veverimer starting at week 12 and continued improvements were seen at weeks 40 and 52. At week 52, the veverimer-treated group experienced a 4.3-second improvement in their ability to stand up from a chair five times, exceeding the minimal clinically important difference of 1.7 seconds.

I've presented here some highlights of the data included in the most recent Lancet publication. Details on these results and other data can be found in the publication. All three of our blinded placebo-controlled multi-center clinical trials have been published in very well-respected high-impact journals. These publications have allowed us to share the exciting findings, the under-serving effect of serum bicarbonate increase, with the potential of first and only treatment of metabolic acidosis that uses the novel mechanism of action of acid binding and removal.

The results show an improved physical function longer times the composite DD50 clinical endpoint are consistent with the basic pathophysiology of metabolic acidosis and we believe add to the overall body of evidence of the link between treating metabolic acidosis and improving muscle, bone, and kidney health.

Next, we would like to call your attention to some recent data generated by a group associated with the University of Dundee in England. The BiCARB study is the first multi-center, randomized, double-blind, placebo-controlled study of oral sodium bicarbonate. Results from this trial of 300 patients with CKD and mild metabolic acidosis have been made available on the European Clinical Trial Register website. The protocol for the study, which is available online was published by Dr. Miles Witham and colleagues and trials in 2015.

The study randomized 152 patients to 1.5 to 3 grams of oral sodium bicarbonate and 148 patients to matching placebo. The primary endpoint for the trial was the between group difference in the change of the short physical performance battery of SPPBs for after one year of treatment. The SPPB is a composite measure of physical function composed of five times repeated chair stand test, the gait speed test, and the balance assessment. Each of those three components contributes from zero to four patients to the patient's SPPB score with a higher score indicating better lower extremity function and the maximum score being 12.

The subjects were enrolled at 27 study centers in the UK. At baseline, the average age of the study population was 74 years. The mean eGFR was 18 mL to 20 mL per minute and the mean serum bicarbonate was 20 to 21 milligrams per liter. Baseline scores on the SPPB averaged approximately 8 in both groups.

Approximately half of the study participants in each group withdrew earlier for the study. The most common reasons for early discontinuation were withdrawal of consent by the subjects and adverse events. After 12 months of treatment, the SPPB score increased 0.3 points in the bicarbonate group and 0.7 points in the placebo group with a p-value of 0.15, indicating no difference between treatments.

Changes from baseline and scores on the quality life were also not different between groups at the pre-specified two-year time point. The comparison of serum bicarbonate levels after two years show the very small but significant difference. Mean serum bicarbonate was 22.9 milligrams per liter in the sodium bicarbonate arm and 22.5 milligrams per liter in the placebo arm. No significant difference was observed in eGFR. These results are in sharp contrast to what we saw with veverimer in our own blinded placebo-controlled multi-center trial.

With that in mind, let me turn now to our commercial readiness. Given our plans to submit the NDA in the third quarter of this year, we're anticipating approval of veverimer next year, which takes us to a discussion of our pre-launch activities. We've been in high gear of building our commercial and medical affairs teams, advancing our disease awareness campaigns, continuing our payer discussions, and planning for a major presence at the American Society of Pathology Kidney Week meeting to be held in Washington DC in early November.

At the Kidney Week meeting, we plan to present the 301E data and some very intriguing data from a major medical health record database and the true prevalence of metabolic acidosis versus actual real world diagnosis and treatment rate. Our disease awareness efforts at the meeting will highlight the importance of recognizing, diagnosing, and treating metabolic acidosis. They will also seek to raise the awareness of the serious consequences of the disease if left untreated, including bone loss, muscle wasting, early mortality, and accelerated progression of CKD.

Our planned NDA submission for veverimer will be a major achievement and I am proud of the Tricida team for taking the program from investigation of new drug application to a planned NDA submission in less than four years. The submission of the NDA this quarter has been an aggressive internal goal and I want to conclude my remarks to the team that is currently working around the clock to finalize the new drug application for veverimer.

Now, I'd like to turn the call over to Geoff to discuss our financial results for the quarter.

Geoffrey Parker -- Senior Vice President and Chief Financial Officer

Thank you, Gerrit and thank you all for joining us today. I will now provide a brief overview of our financials. Additional detail on our second quarter financial results can be found in our press release issued earlier today and our 10-Q which will be filed with the SEC.

We are pleased to report that we remain in a strong financial position. As of June 30th, 2019, Tricida had cash, cash equivalents, and investing totaling $405.3 million. In the second quarter, our research and development expenses were $29 million. General and administrative expenses were $8.9 million for the second quarter of 2019. Our net loss for the second quarter of 2019 was $36.6 million or $0.75 per share, including non-cash stock-based compensation expense of $4.4 million.

As we look forward to the completion of 2019, our research and development expense is projected to increase to between $30 million and $40 million in each of the third and fourth quarters, given the timing of veverimer drug substance production and an increase in our clinical trial expenses related to VALOR-CKD.

General and administrative expense is projected to increase to between $13 million and $15 million in each of the third and fourth quarters, given the steady increase in expenses related to our commercial preparations for the anticipated launch of veverimer.

From a cash burn perspective, we reiterate our guidance that our use of cash in 2019 will be between $135 million and $145 million. We project that our cash on hand together with our barring availability under our Hercules debt facility will be sufficient to fund the anticipate launch of veverimer in 2020 and support our operations well into 2021.

Finally, I am pleased to announce that we will host our first investor day scheduled for October 15th in New York. The agenda will include a panel of medical experts who will discuss the serious consequences of metabolic acidosis and its link to CKD progression and will include presentations from our medical affairs and commercial team discussion our launch preparations. We look forward to seeing you there.

I would now like to turn the call over to the Operator for any questions. Operator?

Questions and Answers:

Operator

Thank you. Ladies and gentlemen, if you have a question at this time, please press the * then the number 1 key on your touch tone telephone. If your question has been answered or you wish to remove yourself from the queue, please press the # key. Your first question comes from the line of Jessica Fye from JP Morgan. Your line is open.

Jessica Fye -- JP Morgan -- Analyst

Thanks for taking my questions and thanks for the update on the filing timeline. Maybe building on that, I think you previously suggested the potential to file for approval in Europe maybe 12-15 months after US filing. With the US filing going in in the third quarter, should we still think about a 15-month lag for an EMA submission?

Gerrit Klaerner -- President and Chief Executive Officer

Thanks, Jessica. I think we've got to go and talk to EMA next year. I think our European timeline has not changed based on the Q3 NDA submission.

Jessica Fye -- JP Morgan -- Analyst

Okay. Great. Then on the VALOR-CKD trial, are you seeing higher than expected screen-outs? Can you share anything about the relatively high prevalence of metabolic acidosis and understand why it looks like enrollment might end up completing a little later than anticipated?

Gerrit Klaerner -- President and Chief Executive Officer

We've got 80% of the sites open that we're anticipating to open in this study, a total of 350 sites. We've got approval in all 33 countries. We are seeing screen failure rates that are comparable to our prior trials. So, there's really no higher screen failure rates.

Jessica Fye -- JP Morgan -- Analyst

Lastly, can you remind us when you project you might be able to conduct the interim analysis in VALOR-CKD?

Gerrit Klaerner -- President and Chief Executive Officer

I think the earliest time point is approximately two to three years after full enrollment that we'll talk about later this year. That's dependent on the event rate. It's a timed event trial and in order to do the interim, we need to accrue approximately 50% of the primary outcome events.

Operator:

Your next question comes from the line of Alan Carr from Needham. Your line is open.

Joey -- Needham & Company -- Analyst

Hi, this is Joey on for Alan. Thanks for taking our questions. I was wondering if you could provide a little bit more color in terms of VALOR-CKD, just what your expectations are. Have they changed in terms of the interim analysis? You had the three possible scenarios. Have your expectations changed at all in the last several months?

Gerrit Klaerner -- President and Chief Executive Officer

Yeah. I think the main news is our NDA submission this quarter. As you know, we had a requirement before with FDA in terms of enrollment. I think the ability to really decouple the specific enrollment requirements from the NDA submission, that's really the only change. I think that's major, again, because a post-marketing study, we expected it to take three or four years to fully read out and we have no changes or assumptions around the interim.

Joey -- Needham & Company -- Analyst

Then on the commercial prep front, can you provide an update on preparation in terms of talking to payers and what those discussions have been like? That would be helpful.

Gerrit Klaerner -- President and Chief Executive Officer

I think we have a great team on commercial now and for medical affairs. So, really both areas are important to our pre-launch and ultimately launch activities. Now, we have leadership and are building out the teams. We are engaged with payers. We are engaged with thought leaders. We are engaged with prescribing nephrologists. Really, what believe is the most important thing is to raise disease awareness and to really make it very clear that currently, this is an underdiagnosed and underrecognized disease. That's really the main theme.

Of course, the first double-blind, placebo-controlled study for the unapproved supplement of oral sodium bicarbonate is really critical. That's why we included this very recent data as well. I think we feel very good about our pre-launch activities.

Operator:

Your next question comes from the line of Laura Christensen from Cowen. Your line is open.

Laura Christensen -- Cowen and Company -- Analyst

Thanks for the updates. Good to hear that the conversations went well with the FDA. Just to further clarify -- did they say that the Q3 NDA submission is contingent on a set enrollment goal that you still need to achieve or is that a pretty final decision that Q3 would be feasible?

Gerrit Klaerner -- President and Chief Executive Officer

We are very confident in terms of Q3 and our progress was sufficient to submit the NDA in this quarter. So, I think that's all we're prepared to say.

Laura Christensen -- Cowen and Company -- Analyst

Then I think one of the other gating things was completing stability, having stability data available and that was planned for mid-2019. I don't anticipate there being any issues there, but I just wanted an update if you guys had one about whether that's on track as well.

Gerrit Klaerner -- President and Chief Executive Officer

We have received the stability data. I think it's not going to be in any way, shape, or form a gating item for the NDA submission.

Laura Christensen -- Cowen and Company -- Analyst

Great. Lastly, part of the publication in The Lancet was that commentary from the two practicing nephrologists on the need for studies comparing veverimer to sodium bicarb. I know you've spoken previously about how that's not feasible given that sodium bicarb doesn't improve kidney indication and has the sodium load associated with it. What feedback have you been getting since that commentary was published and how prevalent do you think that view is among nephrologists.

Gerrit Klaerner -- President and Chief Executive Officer

I wish they had the British data available that shows placebo controlled multi-center data on sodium bicarb. That just became available. I think that we feel especially in light of that data, we feel very good about choosing placebo and we have really not heard from the community nephrologists a lot of desire to do so.

Operator:

Your next question comes from the line of Greg Suvannavejh from Goldman Sachs. Your line is open.

Greg Suvannavejh -- Goldman Sachs -- Analyst

Thank you. Good afternoon and congrats on the progress in the quarter. I had two questions if I could. One, just it's an observation around industry that more and more FDA is coming down much harder on companies with pending NDAs with respect to manufacturing. So, I guess the crux of the question is can you remind us how you feel about the status of your manufacturing and pre-approval inspections? Then I've got a follow-up.

Gerrit Klaerner -- President and Chief Executive Officer

I think manufacturing, especially for a high-volume non-absorbed polymer is really top of our mind. We're working with Patheon and we have our Head of Manufacturing, who I've worked with across three companies, so, really a deep expertise in polymer manufacturing. I think we are producing at commercial scale. We will update toward the end of the year in terms of validation progress and any other information in regard to commercial manufacturing.

Greg Suvannavejh -- Goldman Sachs -- Analyst

Great. Then my second question has to do with your activities of what you are anticipating at ASN later this year in DC. I guess the question is what are your specific goals or objectives this year at ASN? Are they different in any way than what your goals might have been last year or is it really more about building awareness of the company or the product? Can you give us a sense of how you're looking at ASN this year as opposed to last year?

Gerrit Klaerner -- President and Chief Executive Officer

Obviously, we have the luxury without a competitor to really benefit the overall community and the understanding of the disease. We've got to sort of having a bigger presence. We're going to talk again about the link of metabolic acidosis in CKD progression. We're going to add in the physical function measures and quality of life in CKD in general. We're working with experts to really not focus on the company, not focus on the compound, but really focus on disease awareness.

Greg Suvannavejh -- Goldman Sachs -- Analyst

Great. Thank you very much. Congrats on all the progress you're making.

Gerrit Klaerner -- President and Chief Executive Officer

Thank you.

Operator:

I'm showing no further questions. At this time, I would like to turn the conference back to you, Jackie.

Jackie Cossmon -- Vice President of Investor Relations and Communications

Thank you, Jenna. Thank you all for joining us on today's call. We look forward to reporting our progress at our investor day in October and on our next quarterly call. Don't hesitate to contact us if you have questions. Thank you and goodbye.

Operator:

Ladies and gentlemen, this concludes today's conference. Thank you for your participation and have a wonderful day. You may all disconnect.

Duration: 25 minutes

Call participants:

Jackie Cossmon -- Vice President of Investor Relations and Communications

Gerrit Klaerner -- President and Chief Executive Officer

Geoffrey Parker -- Senior Vice President and Chief Financial Officer

Jessica Fye -- JP Morgan -- Analyst

Joey -- Needham & Company -- Analyst

Laura Christensen -- Cowen and Company -- Analyst

Greg Suvannavejh -- Goldman Sachs -- Analyst

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