Tricida, Inc.
Q2 2020 Earnings Call Transcript

Published: 8 Aug 2020

[Operator:]

Ladies and gentlemen, thank you for standing by. And 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:]

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 veverimer through the accelerated approval program, our commercial and medical affairs education activities, the conduct of our VALOR-CKD confirmatory post-marketing 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:]

Thank you for joining us today on our second quarter financial results call. In today's call, I will cover 4 topics

[Geoff Parker:]

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 remains 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 noncash 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 obligations of 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?

[Operator:]

[Operator Instructions] And our first question will come from the line of Phil Nadeau from Cowen & Company. You may begin.

[Phil Nadeau:]

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:]

Phil, thanks for the question. Yes, we obviously work closely with FDA on the accelerated approval process. And I think it was really a 2-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 a surrogate that's likely going to translate to clinical benefit. The second step was a quantitative understanding in terms of how the surrogate really impacts 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 to 301E and also the ongoing VALOR-CKD confirmatory post approval study.

[Phil Nadeau:]

And then second, I appreciate this may be maybe a bit premature, but if we were to assume data from VALOR-CKD would be necessary, is there any way that you could just 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 you do the those processes go more quickly?

[Gerrit Klaerner:]

Yes. I want to speculate in terms of the timing of the interim analysis, I think that's something that we'll know more and better towards 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 answer. 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 towards the end of the year.

[Operator:]

Our next question will come from the line of Alan Carr from Needham. You may begin.

[Alan Carr:]

I'm looking at the sequence of events in terms of bringing on the sales force and it was only - it looks like a few days before, I notice from the FDA. I guess, maybe you can go through how you plan to leverage this growth if there is a meaningful delay beyond the PDUFA date to approval?

[Gerrit Klaerner:]

I think full year, but I assume that you have in terms of the activity of the strategic account managers. 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 helps us plan for launch. Once we receive any more the further feedback from FDA, we'll have to see what the delay is and what - given how it makes sense, obviously, to continue that. But right now, I'm actually very proud of the whole team. I think what they're able to do, not just in terms of virtual meetings, but in fact, in terms of face-to-face meetings with the nephrologists in the office and getting really high-quality information on their awareness of the disease, I think that is incredibly valuable. We'll continue to do that, and I'm excited about it.

[Alan Carr:]

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 the drug hasn't launched yet. But do you have a 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:]

Yes. I think, first of all, I think we are quite happy that we have the 40 strategic account managers on board and now 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 were able to do plus also a lot of virtual interaction and with a really 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 all arguably if the drugs get 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 really 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.

[Operator:]

[Operator Instructions] Next question will come from the line of Graig Suvannavejh from Goldman Sachs. You may begin.

[Graig Suvannavejh:]

Yes. Maybe I'd like to just revisit kind of your expectations around time lines 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 my earlier - in your prepared comments, you said it - you should be able to hope to get a meeting with FDA within the next 30 days. I just want to confirm that it's 30 days and not 60 days. And again, I don't know FDA working on that well, but just want to confirm that you're thinking that's it's 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:]

Graig, I think you're understanding is correct. I think the most likely response we expect is a complete response letter. We push to respond as quickly as possible and send in the Type A meeting request and the briefing book to address any potential issues noted in such a potential letter, and it is not 60 days in 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 in the 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 disclose.

[Graig Suvannavejh:]

Okay. And then my follow-up question, I was reading through 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 just a philosophical mindset that you just have to wait and see and then you'll activate accordingly?

[Gerrit Klaerner:]

No, I mean, you know us, we are prone to overpreparing and overthinking. And we are basically trying to get all of our information and topics in order so we can only basically respond to any issues that they would bring up. So we're not waiting by the mailbox. We are made to be actively sort of thinking through what potentials there are and how we could quickly respond. We feel real sense urgency to really work collaboratively with FDA to overcome any of those potential deficiency that they might put into a potential thereof.

[Operator:]

[Operator Instructions] I'm not showing any further questions on my end.

[Jackie Cossmon:]

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 e-mail us at [e-mail]. Thank you and goodbye.

[Operator:]

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.