What happened

Shares of Tricida, Inc. (TCDA) are tumbling 38.5% at 1:45 p.m. EDT on Thursday after the pharmaceutical company disclosed the Food and Drug Administration (FDA) has found deficiencies in its application for approval of veverimer.

So what

Designed to bind to and remove excess acid in chronic kidney disease patients, veverimer is being evaluated by the FDA for approval under the regulator's Accelerated Approval Program. Unfortunately, management says the FDA has alerted it to deficiencies relating to its application for approval, calling into question if an FDA decision will be issued as expected on Aug. 22.

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There are 3 million people in the U.S. with chronic kidney disease and metabolic acidosis, a buildup of acid in the body that lowers serum bicarbonate levels, contributing to kidney disease progression and life-threatening complications. Currently, treatment consists of dietary changes and taking low-dose sodium bicarbonate to increase serum bicarbonate levels. However, the FDA hasn't approved this approach and sodium bicarbonate can cause potentially harmful increases in sodium in chronic kidney disease patients, many of whom are on low-sodium diets.

Tricida didn't disclose the FDA's exact concerns about veverimer, but management says it's engaging with the agency to address its questions.

Now what

Veverimer is the pharmaceutical company's only clinical-stage drug in development, so securing a regulatory nod is critical.

In clinical trials, 59% of veverimer patients saw signs of a drop in metabolic acidosis, versus 22% of patients receiving a placebo. Also, just five of 124 patients taking veverimer saw kidney function deteriorate by 50% or worse after 52 weeks, compared to 10 of 93 patients in the placebo group.

Nevertheless, investors might want to focus on other stocks with more clarity until we know exactly what's concerning the FDA. Potentially improving outcomes for CKD patients is significant, but uncertainty over how this news affects the FDA's timeline is worrisome.