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Tricida Inc (TCDA)
Q4Â 2019 Earnings Call
Feb 27, 2020, 4:30 p.m. ET
Contents:
- Prepared Remarks
- Questions and Answers
- Call Participants
Prepared Remarks:
Operator
Ladies and gentlemen, thank you for standing by, and welcome to the Tricida Fourth Quarter 2019 Financial Results Conference Call. [Operator Instructions]. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions]. I would now like to hand the conference over to Jackie Cossmon. Thank you. Please go ahead.
Jackie Cossmon -- Vice President of Investor Relations and Communications
Thank you, Kathy. Good afternoon, and thank you for joining the Tricida Fourth Quarter and Year End 2019 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 fourth quarter and provide guidance for 2020. 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, our hiring plans, our medical affairs activities, the conduct of our VALOR-CKD confirmatory postmarketing trial, recruitment milestones, anticipated activities related to our NDA filing, including the PDUFA goal date and Advisory Committee meeting, 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 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'd like to turn the call over to Gerrit.
Gerrit Klaerner -- Chief Executive Officer and President
Thank you, Jackie, and thank you all for joining us today on the call. I'll move right into the key goal for Tricida in 2020; the planning and execution of a successful launch of the Veverimer. While our PDUFA goal date is just six months away, and we are engaged in multiple activities to ensure a successful launch of the veverimer in the fourth quarter of this year, and sales growth [Phonetic] in 2021 and beyond.
In the next six months, we will continue to support and expand our comprehensive metabolic acidosis disease awareness and education campaign to communicate the existing evidence that increasing serum bicarbonate in patients with metabolic acidosis and CKD slows the progression of CKD and can potentially improve how patients feel and function.
We believe the broad understanding of this evidence will help to establish and increase the urgency to treat patients with a serious condition. Our plans include extensive education interactions with nephrologists as well as significant payer engagement. In 2019, we made key hires in both the commercial and medical affairs functions, adding 27 executive in management positions. In the first two months of 2020, we have already added an addition of 27 people to those teams, and [Phonetic] our key role is to expand our scientific exchange, enable market access, further our branded marketing campaign, prepare for the veverimer sales and ensure smooth logistics for the commercialization of the veverimer.
Let me now highlight three major initiatives in the coming months. First, peer-to-peer engagement with nephrologists by our medical affairs team. Second, disease awareness and education by our marketing team and field-based strategic account managers. Third, payer interactions by our market access team to ensure appropriate coverage of veverimer if approved.
Our medical affairs team now includes 14 medical professionals to engage with nephrologists. Elizabeth Faust leads this team and has a long and successful carrier in medical affairs where she led the teams at Kite and Pharmacyclics, and has key medical affairs roles at Celgene and Amgen. She joined us late last year and has already made a significant impact. The Medical Science Liaison or MSL team is in place and will be deployed at the upcoming National Kidney Foundation spring meeting at the end of March.
By April, we expect to have nearly a dozen MSLs engaging with hundreds of key opinion leaders, community nephrologists and healthcare professionals answering questions about the pathophysiology of metabolic acidosis and reviewing the growing body of peer-reviewed publications on the serious complications of metabolic acidosis and the evidence of the link to CKD progression. Our MSLs will also play an important role in furthering our understanding of why despite clinical practice guidelines, indicating treatment of metabolic acidosis is necessary, the disease is currently so under-treated.
Most nephrologists you talk to would probably say that they use sodium bicarb to manage metabolic acidosis in their non-sodium sensitive CKD patients. But the evidence from multiple independent sources suggests that less than 15% of the patients with metabolic acidosis and CKD are actually treated with sodium bicarbonate.
We of course believe that the primary impediment to treatment is the lack of an FDA-approved therapy and limitations of sodium bicarbonate to manage metabolic acidosis. Two recent multi-center placebo controlled studies showed that the most common doses of sodium bicarbonate used today to manage metabolic acidosis were ineffective.
In these studies, sodium bicarbonate doses typically used in clinical practice, that is 0.5 to 1 grams three times daily achieved very little difference in mean serum bicarbonate levels between the active and placebo groups and showed no clinical benefit of sodium bicarbonate treatment. Another concern nephrologists have with recommending sodium bicarbonate to their patients is that higher sodium intake has been associated with significant reductions in the effectiveness of renin-angiotensin aldosterone system or RAAS inhibitors.
The RAAS inhibitors are one of the only classes of agents that have been proven to slow CKD progression. A post-hoc analysis of combined data from the RENAAL and IDNT trials evaluated the impact of low, medium and high levels of 24-hour sodium/creatinine ratio in patients administered angiotensin II receptor blockers or ARBs versus non-RAAS inhibitor treated patients.
The authors concluded that -- and I quote directly from the publications, the RENAAL and cardiovascular protective effects of ARB therapy compared with non-RAAS inhibitor based therapy attenuated in subjects with a larger consumption of sodium, certain subjects with a highest sodium intake the treatment effect on heart, renal and cardiovascular outcomes were completely annihilated. Approximately 70% of patients with CKD are treated with RAAS inhibitors to manage their hypertension and therefore these patients cannot afford an elevated level of sodium intake. Back to our MSLs. Another critical role of our MSLs will be recruiting nephrologists to participate in our ultimate CKD patient registry.
This registry will advance the understanding of metabolic acidosis in CKD by enabling us to generate clinically important publications and giving us insight into the real world effects of metabolic acidosis in patients with CKD. The medical affairs effort includes medical communications generated from publications, participation in national, regional and local congresses, work with efficacy groups and importantly training together leading experts in nephrology.
We now have a growing number of key opinion leaders in nephrology that we are engaging with to identify key topics related to the complications of metabolic acidosis in patients with CKD. In 2019, we had 14 publications and we aim to double that this year. 14 abstracts have already been accepted for presentation at the NKF spring meeting and the Southwest Nephrology conference in Arizona, so we're well on our way.
Tricida is also committed to general medical education and has sponsored three independent continuing medical education of CME courses covering CKD and metabolic acidosis. These programs are anticipated to reach over 2,000 nephrologists. Now turning to our commercial team led by Susannah Cantrell. As you know, Susannah has a significant commercial leadership experience from Gilead and Genentech. She has made significant progress on the disease awareness front with both nephrologists and payers and is preparing for our branded launch.
And at Susannah's leadership, we expanded our marketing team, hired our entire market access and sales management teams and built the infrastructure to support sales operations and product distribution. Our disease awareness campaign has been expanded to include significant digital direct targeting to drive pathologist to the metabolic acidosis inside website and to deliver key messages intended to raise awareness of metabolic acidosis.
To [Phonetic] grow our disease awareness [Indecipherable] for the deployment of a field-based support team of 80 to 85 strategic account managers. This team will be initiating our in-person disease awareness campaign that enables us direct interactions with nephrologists and other healthcare professionals to share their most recent publications and data about metabolic acidosis and its complications.
These visits will also enable the reps to gain familiarity with key stakeholders in their territories. Our third major initiative, educating payers and completing the necessary tasks to ensure appropriate coverage of veverimer if approved is well under way. Our work with payers began very early in Tricida's history, and this effort continues. Our market access team is led by Rocio Manghani who has extensive experience in all aspects of payer engagement and distribution logistics from Kite, Celgene and Roche. Her team consists of 16 professionals covering all aspects of access to veverimer from supply chain logistics to engaging with payers and managing easier access to veverimer.
Our corporate account team has already met the 51 payers representing approximately $230 million targeted insured lives. These engagements enable us to educate payers on the impact and consequences of metabolic acidosis to present veverimer as a potential first and only FDA-approved treatment for metabolic acidosis and to provide real world data on the potential health and economic benefits of treating metabolic acidosis. Payers have shown keen interest in [Phonetic] a significant health benefits for patients that translate to cost savings.
These early engagements have also enabled us to understand the timing of requirements for coverage from these payers. Also on the market access front, we are setting up our patient's portal [Phonetic] ranging from open access distribution channel, which was our both retail and specialty pharmacies access to the veverimer and setting us the appropriate market access infrastructure to ensure broad access to the veverimer at launch.
Our goal in the market access fund is to meet the 100 payers prior to our PDUFA date. Our post meeting payer surveys will confirm our success in reaching these payers with the right message and also gauge their attitude about the need to include the veverimer on their formularies. Beyond these significant medical affairs and commercial efforts, we continue to focus on VALOR-CKD recruitment. We have made good progress in enrolling patients in a lot of CKD post marketing trial. With large outcome trials being conducted in 33 countries at approximately 350 [Phonetic] sites. Our target sites have been opened and we anticipate randomizing 600 [Phonetic] subjects in the trial. We believe [Phonetic] a complete enrollment this year.
And finally, with respect to our NDA, we will not be providing update on our discussions or interaction with the FDA during the review process, other than to say, that the routine matters [Indecipherable] submission, on the way and we'll continue to work with the FDA to enable them to complete their review in a timely manner.
The FDA is planning to hold the Advisory Committee meeting or ADCOM to discuss the application. We're anticipating that the ADCOM would likely occur in the second quarter of 2020 and we'll know the topic of discussion closer to the meeting date. As we said previously, given that we are pursuing a potential disease modifying indication in CKD, utilizing the Accelerated Approval Program, we welcome this opportunity, and we will be prepared to present the underlying rationale and the considerable value of evidence supporting the treatment of metabolic acidosis, slows the progression of kidney disease.
Furthermore, we will be ready to work with all of our veverimer clinical data including results [Indecipherable] on the surrogate endpoint such as improvements in how the patients feel and functions and the impact on mortality and progression of CKD. I hope we provided you with a clear understanding of how focused we are on reaching our target audience, to increase the understanding that metabolic acidosis linked to CKD progression. And that there simply are no safe and efficacious FDA approved treatments for the serious condition.
We believe this will lead to a successful launch of veverimer, with early adoption and favorable payer coverage. I'll now turn the call over to Geoff for a review of our financial results.
Geoffrey Parker -- Chief Financial Officer and Senior Vice President
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 detail regarding our fourth quarter and year-end financial results can be found in our press release issued earlier today. Our financial position remains strong. As of December 31st 2019, Tricida had cash and investments of $355 million. In the fourth quarter, our R&D expense was $40.7 million, G&A expense was $17.5 million.
Our net loss for the fourth quarter was $58.2 million or $1.17 per share including noncash stock-based compensation expense of $9.4 million. And now turning to our financial guidance for 2020, as Gerrit has indicated, we are building out our commercial and medical affairs teams and conducting numerous other activities and preparation for a successful launch of veverimer. For the first half of 2020, we expect that R&D expense will average approximately $40 million per quarter with the first quarter expected to be slightly higher than the second quarter.
In the second half of 2020, we forecast that R&D expense will decline to an average of approximately $25 million per quarter. R&D expense is forecasted to be higher in the first half versus the second half given the timing of certain expenses related to the timing of drug substance delivery and plant optimization at our CMO Patheon. For the first half of 2020, we forecast the G&A expense will average approximately $30 million per quarter with the second quarter expected to be slightly higher than the first quarter.
In the second half of 2020, we forecast that G&A expense will increase to an average of approximately $40 million per quarter as we complete the build out of our commercial organization. We estimate total cash expenditures of $250 million to $260 million in 2020. Based on our current operating plan and excluding any potential revenue from veverimer if approved, Tricida expects that its cash, cash equivalents and investments as of December 31, 2019 and its anticipated additional borrowing capacity of $90 million under its Hercules debt facility will enable the Company to fund its operations at least into the second half of 2021. Assuming we meet our internal commercial forecast for veverimer, our cash runway could be extended through to profitability.
With that, I'll open the call to questions. Operator?
Questions and Answers:
Operator
[Operator Instructions]. First question is from Phil Nadeau of Cowen & Company.
Phil Nadeau -- Cowen & Company -- Analyst
Good afternoon, congrats on the progress, and thanks for taking my questions. First Gerrit, one for you, a follow-up comment to you what you just said on the ADCOM, you said you'll know the topics for sure, as you get closer to the meeting. One, do you have any sense what the topics could be today, and then two, how will you communicate the topics once you are aware of them? Is that something that you will disclose or will we have to wait until the briefing documents are posted on the website to know for sure.
Gerrit Klaerner -- Chief Executive Officer and President
Yeah, Phil, we don't really speculate about the potential topics that might be asked and that typically happens quite late in the game. So we don't expect any communication before the actual outcome. And it's a very discrete and very clean and clear development program. So we are preparing to present the three studies, really the TRCA-101 study, the pivotal trial TRCA-301 and then of course the extension trial TRCA-301E.
So that's at the heart of everything we are preparing and it's very straightforward.
Phil Nadeau -- Cowen & Company -- Analyst
Got it. Fair enough. And second, on your payer engagement, I think at your Analyst Meeting you mentioned that you were continuing to work on pharmacoeconomic data to communicate to the payers the benefits of the veverimer. Can you give us maybe an update on what data you have today and what the payers are finding most compelling?
Gerrit Klaerner -- Chief Executive Officer and President
Yeah, I think we've moved on from generating more data and more to really communicating the overwhelming existing data and we've shared that with you before, in terms of the annual cost savings. And more importantly I think how CEO [Phonetic] explained it is that each month that payers don't increase as patients don't increase their Serum Bicarb by one milliequivalents, they have 7% higher cost that month.
And so that's really the core message that resonates, because it's not -- it's not a long-term cost savings. It's really a short-term game where really each milliequivalents of serum bicarb increase matters.
Phil Nadeau -- Cowen & Company -- Analyst
Got it. Okay. And then last question from me, what's your most recent thinking on Europe? When could we have some clarity on your European filing plans?
Geoffrey Parker -- Chief Financial Officer and Senior Vice President
So, Phil, it's Geoff. Our plans continue to be that we will have substantive [Phonetic] engagement with the European regulatory authorities starting just after our expected approval in the US. So that would be post the August 22nd PDUFA date.
Phil Nadeau -- Cowen & Company -- Analyst
Perfect. Thanks for taking my questions and congrats again on the progress.
Geoffrey Parker -- Chief Financial Officer and Senior Vice President
Thanks, Phil.
Gerrit Klaerner -- Chief Executive Officer and President
Thanks, Phil.
Operator
The next question is from Jessica Fye of J.P. Morgan.
Jessica Fye -- J.P. Morgan -- Analyst
Hey guys, good afternoon and thanks for taking my question and thanks for providing that detailed operating expense outlook. When I add up what sounds like $130 million of R&D spend and $140 million of G&A or SG&A spend, I get around $270 million for the year. So I want to make sure those figures are GAAP and include non-cash expenses since it came out a little higher, I think, than the $250 million to $260 million range you're talking about for cash spend in 2020?
Gerrit Klaerner -- Chief Executive Officer and President
Yeah. Those expenditures do include non-cash stock-based compensation.
Jessica Fye -- J.P. Morgan -- Analyst
Okay, great. And then when we think about the $40 million per quarter-ish SG&A run rate, you'll exit the year with, is that a good run rate to think about for 2021 and beyond? Is that kind of a fully loaded SG&A rate?
Gerrit Klaerner -- Chief Executive Officer and President
So on -- first let me comment on the R&D side, I think this will be likely our highest R&D year and so I do think the exit rate for R&D of $25 million should be applicable for at least the '21, '22 timeframe. And then as we begin to wind down VALOR in the '23 time frame, we expect R&D to continue to decline. As far as SG&A, we would expect the overall expense ratio of the Company to stay about static to where it will be in 2020, and so as R&D goes down, SG&A would step up.
So as far as ending the year at $40 million on SG&A, I think that, that is pretty close to what the annual run rate will be, but it could step up 10% or 15% from there.
Jessica Fye -- J.P. Morgan -- Analyst
Awesome. Thank you.
Operator
Your next question is from Graig Suvannavejh of Goldman Sachs.
Graig Suvannavejh -- Goldman Sachs -- Analyst
Hey, good afternoon. Thanks for taking my questions. Congrats on the progress. Two questions from me. One, how should we think about the real world experience with the veverimer and how that might contrast with the clinical trial experience. Some drugs perform very well in the clinical trials and in the real world they don't perform the same. So any kind of color around your expectations around how you think the veverimer will do once approved would be helpful.
And then along the same vein, how should we be thinking about perhaps your expectations on the slope of uptake for this product? Is it long lead times you expect this to be a hockey stick, there's really not much out there. So, it would seem to suggest to me that this could be relatively quick, but I just want to make sure our expectations are set appropriately. Thank you.
Gerrit Klaerner -- Chief Executive Officer and President
Graig, this is Gerrit. So I think this -- to the question and small molecules that gets metabolized in different ways or biologics, I agree with you there the controlled setting of the clinical trial versus real world there is risk. We don't believe that that's the case for a non-absorbed polymer GI-based polymer where we effectively are doing what the kidney naturally does, right, the kidney -- how [Phonetic] the kidney can naturally excrete acid, it loses that ability and then effectively veverimer, binding hydrochloric acid in the GI tract is making up for what the kidney can no longer do.
So both from a compound perspective as a non-absorbed polymer and from a disease perspective in terms of CKD and metabolic acidosis, we don't expect a difference between what we've seen in the clinical trials and what we hope to see in the real world.
Graig Suvannavejh -- Goldman Sachs -- Analyst
And then in terms of just how we should be thinking about the slope of market uptake.
Gerrit Klaerner -- Chief Executive Officer and President
Yeah, we think that when you compare it again in a data-driven manner when you compare it to other launches where there were incumbent FDA approved products like in hyperkalemia and [Indecipherable], this is different, right. We are building the market for metabolic acidosis and we hope to be once if approved that we hope to be the first and only and we believe that the pent-up unmet medical need really is going to outpace the market building component of this.
So we think that there is a good chance for a fast uptake.
Graig Suvannavejh -- Goldman Sachs -- Analyst
Okay, thank you very much.
Gerrit Klaerner -- Chief Executive Officer and President
Thanks, Graig.
Geoffrey Parker -- Chief Financial Officer and Senior Vice President
Thank you.
Operator
Your next question is from Alan Carr of Needham.
Alan Carr -- Needham & Company -- Analyst
Hi, thanks for taking my questions. Can you give us an update on VALOR-CKD, you mentioned, you expect to finish enrollment at some point this year, I'm wondering if it's -- if you're still thinking middle of this year and can you go over your latest thoughts and intentions around the interim analysis?
And then second, what about -- beyond the veverimer, any long-term thoughts on what else you might have in the lab or thoughts on business development. Thanks.
Gerrit Klaerner -- Chief Executive Officer and President
Thanks Alan. VALOR-CKD is -- the recruitment is going well, it's really as expected. All the assumptions that we've gone into are intact and we -- I think in terms of the -- the finishing recruitment here, I think this is clearly something that will happen this year, the exact time we'll communicate at a later time point. The -- in terms of a pipeline, I think we are really laser-focused on launch. And that's really something that we as an organization need to focus on and we need to execute against.
And however there is lot of excitement we've -- many of us who worked together here for -- this is the third Company we've done this before, and you can anticipate that we're not going to stop doing what we've done before. So stay tuned, I think toward the end of the year, we'll communicate on the potential pipeline.
Alan Carr -- Needham & Company -- Analyst
Great. Thanks for taking my questions.
Operator
And there are no other questions in queue.
Jackie Cossmon -- Vice President of Investor Relations and Communications
Thank you. And thank you all for joining us on the call today. If you plan to be at the Cowen 40th Annual Healthcare Conference in Boston next week we'll see you there. Our presentation will be webcast and available live on our website at 02:10 PM Eastern Time on Monday. As always, if you have additional questions, please don't hesitate to contact us via email at [email protected]. Thank you and goodbye.
Operator
[Operator Closing Remarks].
Duration: 27 minutes
Call participants:
Jackie Cossmon -- Vice President of Investor Relations and Communications
Gerrit Klaerner -- Chief Executive Officer and President
Geoffrey Parker -- Chief Financial Officer and Senior Vice President
Phil Nadeau -- Cowen & Company -- Analyst
Jessica Fye -- J.P. Morgan -- Analyst
Graig Suvannavejh -- Goldman Sachs -- Analyst
Alan Carr -- Needham & Company -- Analyst
