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Tricida Inc (TCDA)
Q2Â 2020 Earnings Call
Aug 5, 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. Welcome to the Tricida Second Quarter Financial Results Conference Call. [Operator Instructions] I would now like to hand the conference call over to Jackie Cossmon, Senior Vice President of Investor Relations and Communications for Tricida. Please go ahead, ma'am.
Jackie Cossmon -- Senior Vice President of Investor Relations and Communications
Thank you, Victor. Good afternoon, and thank you for joining the Tricida Second Quarter 2020 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 first quarter -- 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 anticipated activities related to our NDA filings, including the assigned PDUFA goal date and anticipated communication from the FDA regarding the status of our application, including the potential receipt of a complete response letter, the potential approvability of also veverimer through the Accelerated Approval Program, our commercial and medical affairs education activities, the conduct of our VALOR-CKD confirmatory postmarketing trial, including the timing of the interim analysis and anticipated completion of the study, 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 results -- 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'll turn the call over to Gerrit.
Gerrit Klaerner -- Chief Executive Officer and President
Thank you for joining us today on our second quarter financial results call. In today's call, I'll cover four topics. First, a recap of our recent FDA communications. Second, an overview of the unchanged fundamental and the data supporting the safety, efficacy and potential approval of veverimer. Third, a summary of feedback from the nephrology community on the unmet medical need that metabolic acidosis presents and the desire for an FDA-approved therapy. And finally, an overview of our progress and outlook for our ongoing VALOR-CKD trial.
I'll begin with a quick review of the FDA notification we received recently and our expected next steps. We received notice on July 14 that the FDA has identified deficiencies during its review of the veverimer NDA that preclude discussion of labeling and postmarketing requirements/commitments at this time. The FDA stated that the notification does not reflect the final decision on the information under review. The FDA did not provide any further information or clarity around the nature of the issues underlying the latter or any guidance on timing on when they would provide additional information regarding our NDA review.
However, we currently assume that when the FDA does provide additional correspondence regarding the identified deficiencies, it will likely come on or before our PDUFA goal date of August 22. And while we have no additional information since the July 14, 2020 notification, we believe we are likely to receive clarification on their issues in the form of a complete response letter, or CRL, and that it is unlikely that we will receive approval to market veverimer in the United States on our PDUFA goal date. We were and continue to be surprised and disappointed by this notification from the FDA. We will be prepared to address the FDA's outstanding issues and plan to promptly request to Type A meeting, which are granted to typically result in a meeting with the FDA within 30 days of our request and submission of our briefing materials. We have worked closely with the FDA during the veverimer program to gain approval through the Accelerated Approval Program. Our goal is to continue this collaborative approach on any issues that the FDA raises in the future.
While we will work through a deficiency cited by FDA, it is important to note that we continue to believe that the fundamentals of veverimer result. Based on our interactions with many expert nephrologists, we believe that the veverimer continues to have an attractive compelling and positive benefit risk profile. As a reminder, [Indecipherable] from the data described in our two Lancet publication. The veverimer shown a statistically significant increase in serum bicarbonate versus placebo, both at week 12 and at week 52 in our TRCA-301E trial. Moreover, veverimer was well tolerated. Only 2.6% of subjects under veverimer discontinued prematurely versus 9.8% of subjects on placebo. And it showed an adverse event profile similar to placebo in the 40-week extension trial. Since the data was published, we've observed no new safety signals for veverimer.
As a non-absorbed polymer drug candidate whose mechanism of action is limited to the GI tract, we believe the risk profile is favorable compared to systemic drugs that require an uptick into blood stream and subsequent metabolism to be excreted from the human body. With these fundamentals of veverimer are intact, there's a clear need for an FDA-approved therapy for these patients. When the FDA provides us with feedback, [Indecipherable] confirmed with our NDA, we will be focused and trying to resolve them as quickly as possible. We remain committed to addressing an area of significant unmet medical need for patients with chronic metabolic acidosis and chronic kidney disease. And FDA approved option to treat approximately 3 million patients with MA to potentially slow the CKD progression as much needed.
As a reminder, approximately 124,000 people initiated dialysis or received the kidney transplant every year. And there are approximately 100,000 deaths related to end-stage renal disease every year, which is more deaths per year than breast or prostate cancer.
Let me now turn to some important statistics and feedback that is collected from the approximately 40 Specialty Account Managers who were deployed into the regions across the United States on July 7. To summarize the experiences, the interest from an nephrology community about the metabolic acidosis remains robust. In just the first 12 weeks of being deployed, our Specialty Account Managers [Indecipherable] nearly 6,000 virtual or in-person engagements to discuss metabolic acidosis disease awareness with the nephrologists and their staff. The significant response to engage with our Specialty Account Managers in hearing about metabolic acidosis is impressive. Feedback has been very positive. The strong acknowledgment that metabolic acidosis is important and that there is a need for an FDA approval to safe and efficacious therapy to treat the serious condition.
Our recent ad boards with key opinion leaders have also highlighted the urgent need to slow CKD progression through the treatment of metabolic acidosis. We've now hosted six advisory boards with a total of 72 nephrology experts. There were strong agreements among these nephrologists. If approved, the veverimer could be a significant benefit to patients with CKD and MA.
With regard to our medical affairs activities, more than 5,000 participants, including nephrologists and other healthcare providers have attended, continuing medical education courses and topics related to metabolic acidosis have been spotlight. Also in the second quarter, metabolicacidosis.com website, which is an HCP-only educational site, garnered over 14,000 site visits. The feedback and activity level among with the nephrology community indicates there is also significant interest in our treatment of metabolic acidosis as a link to improve physical function, not just in the context of bone and muscle health, but related to kidney disease progression. In fact, the KDIGO guideline suggests that initiation of dialysis should be based primarily on signs and symptoms and overall well-being of the patient and not just on that [Indecipherable] such as eGFR. Subjective and objective measures of physical functioning assess how patient feels and functions, which is relevant in the dialysis initiation decision.
I will now turn to an update on our postmarketing trial of VALOR-CKD. We continue to believe that we are on track to complete enrollment in this trial in the first half of 2021. Ultimately, the VALOR-CKD trial is designed to answer the question can the veverimer slow CKD progression through the treatment of metabolic acidosis. The primary efficacy endpoint that will answer the question is composite endpoint of renal death, the initiation of dialysis transportation or a 40% or greater reduction in eGFR otherwise known as the [Indecipherable]. It's important to also note that the KDQOL Physical Function Survey has the repeated chair stand test as secondary endpoint in the trial. As a reminder, we observed statistically significant and quite a meaningful improvement for subjects on the veverimer and [Phonetic] subjects on placebo indicating KDQOL Physical Function Survey and the repeated chair stand test in our 301E study. As we're tracking planned number of primary endpoint events in this trial, we believe that this is a good indication that we have picked the right patient population for its confirmatory outcome trial. We will continue to track event rate in the trial and update you by year-end on the timeline for both our interim analysis and anticipate completion of the VALOR-CKD study.
I'll now turn the call over to Geoff to discuss our financials.
Geoffrey Parker -- Executive Vice President and Chief Financial Officer
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 details regarding our second quarter results can be found in our press release issued earlier today. Our financial position remained strong. As of June 30, 2020, cash, cash equivalents and investments were $436.9 million. In the second quarter, our R&D expenses were $28.8 million; G&A expense was $28.4 million. Our net loss for the second quarter was $58.2 million or $1.16 per share. Adjusting for certain non-cash expenses such as stock-based compensation, our non-GAAP net loss for the second quarter was $48.9 million.
In the second quarter, we issued $200 million aggregate principal amount of 3.5% convertible senior notes due 2027. The convertible senior notes are senior unsecured obligation to the company, and interest is payable on May 15 and November 15 of each year beginning on November 15, 2020. The convertible senior notes are convertible into cash, shares of common stock or a combination of cash and shares of common stock at the company's election at an initial conversion rate of approximately 30 shares per $1,000 principal amount, which is equivalent to an initial conversion price of approximately $33.23 per share.
Finally, we will be evaluating our operating plan and cash runway once we receive additional clarity from the FDA, which as Gerrit indicated, is expected to be on or before our PDUFA goal date of August 22.
With that, we will take your questions. Operator?
Jackie Cossmon -- Senior Vice President of Investor Relations and Communications
Victor?
Questions and Answers:
Operator
Thank you. [Operator Instructions] And our first question will come from the line of Phil Nadeau from Cowen & Co. You may begin.
Phil Nadeau -- Cowen & Co. -- Analyst
Good afternoon. Thanks for taking my questions. I appreciate you don't have any more information from the FDA on their objections. But could you remind us of the process that you went through to get the FDA to sign off on the design of the pivotal study, and in particular, the serum bicarbonate primary endpoint? Was there any disagreement between you and the FDA in the design or are you both on the same page?
Gerrit Klaerner -- Chief Executive Officer and President
Hey, Phil. Thanks for the question. We obviously worked closely with FDA on the accelerated approval process. And I think it was really a two-step process. First, really to qualify, we had to reach agreement, which we did that we are treating a serious disease that there is an unmet medical need and that we have surrogate that's likely going to translate to clinical benefit. The second step was a qualitative understanding in terms of how the surrogate really impact the outcome of interest; in this case, the progression of kidney disease, and we also reached agreement on that. And based on that, we designed both the studies 301, 301E and also the ongoing VALOR-CKD confirmatory post-approval study.
Phil Nadeau -- Cowen & Co. -- Analyst
Got it. Okay. That's helpful. And then, second, I appreciate this, maybe a bit premature, but if we were to assume data from VALOR-CKD would be necessary, is there anyway that you could accelerate the completion of enrollment in that trial and/or the time it takes to get to the interim analysis? Do you have levers that you could pull to make even those processes go more quickly?
Gerrit Klaerner -- Chief Executive Officer and President
Yeah. I don't want to speculate. In terms of the timing of the interim analysis, I think that's something that we'll know more and better toward the end of the year. But as you know us, we are doing everything we can to recruit the trial even against the backdrop of a pandemic and events happen at the rate that they do. So there's nothing we can influence, but obviously, we are encouraged by, I think sort of, what we're seeing both in terms of the recruitment and in terms of the event rate. And I think we'll be able to communicate the timing of an interim toward the end of the year.
Phil Nadeau -- Cowen & Co. -- Analyst
Perfect. Thanks for taking my questions.
Gerrit Klaerner -- Chief Executive Officer and President
Thanks, Phil.
Operator
Thank you. Our next question will come from the line of Alan Carr from Needham. You may begin.
Alan Carr -- Needham & Company -- Analyst
Thanks for taking my questions. I'm looking at the sequence events in terms of bringing on the sales force and it was only -- looks like a few days before I noticed from the FDA. I guess, maybe you can go through how you plan to leverage this group, if there is a meaningful delay on the PDUFA date to approval.
Gerrit Klaerner -- Chief Executive Officer and President
Alan, I didn't told you -- I assume that you have in terms of the activity of the Strategic Account Managers. Yeah, for us, I think there's really big value in verifying in the field all the things that I think we have been able to collect from thought leaders and surveys and everything else. And that's a worthwhile activity that really helped us plan for launch. Once we receive any more definitive feedback from FDA, we'll have to see what delay is and what -- if and how it makes sense obviously to continue that. But right now, I'm actually very proud of the whole team. I think what they are able to do, not just in terms of virtual meetings, but actually in terms of face-to-face meetings, witness projects in the office and getting really high-quality information on the awareness of the disease, I think that is incredibly valuable. And we'll continue to do that, and I'm excited about it.
Alan Carr -- Needham & Company -- Analyst
You would also -- I think it was on the last quarterly call, where you all had proposed a change to your sales force strategy. You cut back a number of people and more of a virtual focus. I know it's somewhat premature to have an assessment of how that's going, because drug hasn't launched yet, but do you have maybe a preliminary assessment of how that's going, the strategy of going virtual rather than -- with a reduced force, any thoughts on that at this point?
Gerrit Klaerner -- Chief Executive Officer and President
Yeah, I think -- first of all, I think we are quite happy that we have the 40 strategic account managers onboard and not 80 given the potential for FDA delays. And then, I think from an activity perspective, we were surprised to see how many office visits they're able to do, plus also a lot of virtual interaction and with a very good reach. So we believe that this is really a meaningful size of a sales force at a minimum for the pre-launch activities and arguably if the drug gets approved, we could actually launch with that. But you're right. It's a bit early, and we've got to see -- they have noticed that we are in some of the additional COVID-19 pressure recently, it's a changing landscape in terms of the ratio of office and virtual, and we got to keep an eye on that.
Alan Carr -- Needham & Company -- Analyst
Thanks for taking my questions.
Gerrit Klaerner -- Chief Executive Officer and President
Thanks, Alan.
Operator
Thank you. [Operator Instructions] Our next question will come from the line of Graig Suvannavejh from Goldman Sachs. You may begin.
Graig Suvannavejh -- Goldman Sachs -- Analyst
Yeah, thanks for doing the call and taking my questions. Maybe, I'd like to just revisit kind of your expectations around timelines for the possibility that you may get a complete response letter and just want to confirm that your expectation is that in terms of the playbook, my understanding is you have like 10 days to respond or request a meeting with FDA. And then, I think on the -- earlier in your prepared comments, you said it's -- you should be able to hope to get a meeting with FDA within the next 30 days. I just want to confirm those 30 days and not 60 days. And again, I don't know if FDA working on that well, but just want to confirm that your thinking about within 30 days and then, just beyond that, when are you thinking that you might be able to come back to update the market on next steps? And then, I've got a follow-on to that, please.
Gerrit Klaerner -- Chief Executive Officer and President
Graig, I think your other things is correct. The -- I think the most likely response we expect is a complete response letter. We wish to respond as quickly as possible and send in a Type A meeting request and the briefing book to address any potential issues, nor isn't such a potential letter and it is not 60 days, it's a Type A meeting, so 30 days. Our expectation would be to read the letter and then, basically form an opinion on our disclosure strategy and timing thereof. I think any absence of knowing any of the potential deficiencies or issues, it's very difficult to guess in terms of timing and what meets the threshold, obviously, to dispose.
Graig Suvannavejh -- Goldman Sachs -- Analyst
Okay. Thanks. And then, my follow-up question as I'm reading to the press release, I was struck by the language that you are preparing for all eventualities to swiftly resolve any potential issues. So I guess, is there any additional color you can provide on specifically what you're referring to when you're preparing for all eventualities or is it simply more of just a philosophical mindset that you're just -- you just have to wait and see and then, you'll activate accordingly?
Gerrit Klaerner -- Chief Executive Officer and President
I mean, you know us. We are prone to overpreparing and overthinking. And we're basically trying to get of our information and topics in order. So we can quickly -- basically respond to any issues that they would bring up. So we are not waiting by the mailbox. We remain actively sort of thinking through what potential [Indecipherable] are and how we could quickly respond, if you have a real sense of urgency to clearly work collaboratively with FDA to overcome any of those potential deficiencies that they might put into a potential serum.
Graig Suvannavejh -- Goldman Sachs -- Analyst
Okay. Thank you very much for that clarity, and good luck.
Gerrit Klaerner -- Chief Executive Officer and President
Thank you, Graig.
Operator
Thank you. [Operator Instructions] And I'm not showing any further questions on my end.
Jackie Cossmon -- Senior Vice President of Investor Relations and Communications
Great. Well, we'd like to thank you all for joining us today. As always, if you have additional questions, please don't hesitate to email us at [email protected]. Thank you, and goodbye.
Operator
[Operator Closing Remarks]
Duration: 24 minutes
Call participants:
Jackie Cossmon -- Senior Vice President of Investor Relations and Communications
Gerrit Klaerner -- Chief Executive Officer and President
Geoffrey Parker -- Executive Vice President and Chief Financial Officer
Phil Nadeau -- Cowen & Co. -- Analyst
Alan Carr -- Needham & Company -- Analyst
Graig Suvannavejh -- Goldman Sachs -- Analyst
