Tricida, Inc.
Q3 2018 Earnings Call Transcript

Published: 11 Nov 2018

[Operator:]

Good day, ladies and gentleman, thank you for standing by. And welcome to Tricida Third Quarter 2018 Earnings Conference Call. [Operator Instructions]. As a reminder, this conference is being recorded. At this time, I would like to turn the conference call over to Jackie Cossmon. You may begin.

[Jackie Cossmon:]

Thank you, Olivia. Good afternoon, and thank you for joining the Tricida Third Quarter Financial Results Conference Call. In today's call, Gerrit Klaerner, our CEO, President and Founder will discuss our recent achievements, our future plans for the development of TRC101, and our prelaunch disease awareness and commercial spending initiative. Jeff Parker, our CFO will then speak to our financial results for the quarter and provide a brief overview of our financial outlook. We will then open the call for questions. 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 plans, recruitment milestones, planned NDA submission and nonbranded disease awareness campaign, financial guidance and other statements that are not historical facts. Management's assumptions, 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 third quarter financial results press release that was issued prior to this call, please go to tricida.com and follow the link for our Investor Relations page. At this time, I'll turn the call over to Gerrit.

[Gerrit Klaerner:]

Thank you, Jackie, and thank you all for joining us today. We've made significant progress since our last quarterly conference call, and I'm pleased to update you today on major initiatives that include the upcoming submission of NDA under the Accelerated Approval Program in the second half of 2019, and our successful prelaunch activities for TRC101, including the start of our disease awareness campaign at the 2018 American Society of Nephrology meeting 2 weeks ago. As many of you know, TRC101 is a non-absorbed once-daily orally dosed polymer designed to treat metabolic acidosis and thereby, potentially slow the progression of CKD. TRC101 works by binding and removing hydrochloric acid from the GI tract and have been shown in clinical trials to safely and effectively increase serum bicarb levels in patients with metabolic acidosis. With our NDA submission planned for the second half of 2019, we're now engaged in number of activities, including the launch of our non-branded disease awareness campaign and additional analyses related to both, the health economics and payer landscape for TRC101. Let me now review the key elements of our initial disease awareness campaign, which received strongly positive reception at the ASN meeting. The educational elements of this campaign included a video discussing the link between metabolic acidosis and CKD progression as well as our new mobile app called Neph+. Our disease awareness video features three prominent nephrologists, Dr. Bushinsky, Wesson and Tangri and provides the company as purview of the clear link between metabolic acidosis and the progression of CKD. This nine minute video is also now available in our new disease awareness website, metabolicacidosisinsight.com. Our innovative new mobile app Neph+ contains a patient education tool, designed to help nephrologists quantify an individual CKD patient's risk of progression to end-stage renal disease. It uses the eight variable kidney failure risk equations to quantify how a change in a patient's serum bicarb levels among other variables, such as age and eGFR can effect progression to ESRD. The app also features commonly used nephrology equations and a summary of key KDIGO guideline recommendations for the care of patients with CKD. The Neph+ can be downloaded from the Apple App Store or Google Play. We were very pleased with the popularity of this mobile app among ASN meeting attendees. By the second day of the meeting, healthcare providers were coming to the booth specifically asking about the new app and enthusiastically embracing it. There were over 1000 downloads of the app within just the first five days of the introduction. We'll continue to update and optimize the Neph+ app to maintain this important connection to the broader nephrology community and to establish Tricida as a significant contributor to the continued education of nephrologists. To further advance our prelaunch commercial plans, we're in the final stages of completing extensive pharmacoeconomic awareness, quantifying the potential cost savings for a new treatment for metabolic acidosis. We are wrapping this work and plan to get additional pricing and reimbursement input from the third iteration of our payer engagement in the first half of 2019. Of course, all our prelaunch activities are predicated upon the approval of TRC101. So I'd like to now turn to our activities associated with our NDA submission, which is planned for the second half of next year. We remain on track to achieve the three key milestones that will enable submission of the NDA, which include completion of our ongoing TRCA-301 safety extension trial in the first half of 2019; availability of our 12-month registration stability data towards the middle of the year, both of which are on track and the completion or near-completion of enrollment in our VALOR-CKD trial in the second half of 2019 concurrent with our NDA submission. Now let me step back for a moment to review the design of the VALOR-CKD trial, which is also known as TRCA-303. It is intended to evaluate the efficacy and safety of TRC101 in delaying CKD progression in pre-dialysis patients with metabolic acidosis. The primary endpoint of the trial is a time to first renal event in patients treated with TRC101 versus placebo. For the purposes of this trial, a renal event is defined as either progression to end-stage renal disease, that is ESRD, or a greater or equal to 40% reduction in estimated GFR or renal death. We estimate that we will need to randomize approximately 1,600 subjects with half taking TRC101 and half taking placebo, in order to show a 30% to 35% renal event rate reduction with TRC101. Please remember that the VALOR-CKD study is a post-marketing trial. We anticipate that it will take approximately four years to complete with data reading out in approximately 2023. As a reminder, assuming successful initial approval and an Accelerated Approval Program, we target our U.S. launch of TRC101 for the second half of 2020. Our focus in the coming months is on the recruitment milestone of the VALOR-CKD clinical trial. This includes obtaining health authority and ethics committee approvals in various countries, initiating sites and screening and enrolling patients. We hosted our first investigators meeting in New York City at the end of September and just completed an investigator meeting last week in Rome for Central and Eastern European investigators. Several study sites are now screening patients. So we anticipate beginning our patient enrollment in the VALOR-CKD trial before the end of the year. The VALOR-CKD trial will be conducted on a global scale at up to 350 sites in 35 countries. We plan to initiate most of these sites between now and the end of the first quarter of 2019, which means we expect the majority of patients to be enrolled in the trial in the second and third quarters of 2019. We believe, our enrollment targets are achievable in that time frame, given that the enrollment pace per site is expected to match the Phase III trial recruitment and as we have pre-identified a meaningful number of potential patients. Turning now to our ongoing TRCA-301 trial. It is on track for completion in the first half of 2019. This is a safety-extension trial that we agreed with the FDA to conduct as a blinded long-term study of TRC101. We will submit the results of this study in the NDA. In addition to the safety data, which is required for the NDA submission, we will also evaluate a secondary endpoint, the duration of the treatment effect on blood bicarbonate and two measures of physical functioning, the patient-reported kidney disease quality of life or KDQOL physical function survey, and we objectively measured repeated chair stand test. These measurements are not required for our NDA submission, but we believe, that positive results on these endpoints would further substantiate the potential clinical benefits of TRC101 in patients with CKD and metabolic acidosis. And I'll try to describe in a minute, based on the new post-hoc analysis of the repeated chair stand test results from our Phase III study, we have refined the statistical analysis plan for this endpoint in the extension study and are hopeful, that we will also see strong indications of clinical benefit in this endpoint as well as the KDQOL physical function survey endpoint. With respect to our completed Phase III trial results, the data were presented in the Late-Breaking Clinical Trial poster session at the ASN meeting. The Phase III data were met the great interest by the nephrology community and constituted one of the few positive double-blind placebo-controlled trials of a new chemical entity in the nephrology field this year. As you know, TRC101 met the primary and secondary endpoints of the study with high statistical significance, along with the prespecified exploratory endpoint that evaluated how patients feel and function, based on the patient report at this month for the KDQOL physical function survey. The second exploratory endpoint was a corresponding objective measure of physical function using a repeated chair stand test. It measured patients time to complete five sit-to-stand repetitions. Patients treated with TRC101 for 12 weeks improved the time versus placebo, although we just missed statistical significance in comparing the two groups. However, we recently conducted a post-hoc rank-based analysis of these data, which we now believe to be a more appropriate statistical method based on the actual patient results that were not normal in distribution. This rank-based analysis resulted in a highly statistically significant difference in favor of the TRC101 treated group compared to the placebo group. As such, we have now included the statistical method in the TRCA-301E trial in the event that the data from the patient results once again do not fit a normal distribution. Additionally, I'm very excited to report that the results from the TRCA-301 study have been accepted for publication by a well-recognized prestigious medical journal. Further details of this news will be announced when we know the publication date. So to summarize, we continue to make great progress towards bringing TRC101 to patients. On the pre-commercial front, we are conducting additional analyses related to the value proposition and payer needs for our potential first-in-class treatment for patients with CKD and metabolic acidosis to potentially slow kidney disease progression. Our disease awareness efforts are underway with introduction of our metabolicacidosisinsight.com website and Neph+ mobile app. We plan to complete the TRCA-301E study in the first half of next year. Our stability studies are scheduled to be complete by mid-next year, and we plan to submit the NDA as soon as we complete or nearly complete enrollment in the VALOR-CKD trial, which is planned for the second half of next year. With that, I'll turn the call over to Jeff.

[Geoffrey Parker:]

Thank you, Garrett and thank you all for joining us today. I will now walk you through our financial results for the quarter and then open the call to questions. We continued to exercise good discipline on the spending front with our R&D expense and G&A expenses coming in below our previous guidance for the third quarter. We reported R&D expense of $25.2 million for the recent quarter compared to $7.7 million in the same period last year. As Gerrit described earlier, we have now initiated multiple clinical sites in the U.S. and Europe for the VALOR-CKD trial, and the increase in R&D expense compared to last year was primarily due to increased costs for activities related to this trial and our other TRC101 clinical development activities, including increased cost for drug substance manufacturing as well as increased personnel and related costs. G&A expense was $4.2 million for the recent quarter compared to $3.1 million for the same period in 2017. The increase in G&A expense in the recent quarter compared to the prior year was primarily due to increased administrative costs, supporting activities related to our TRC101 clinical development program, including increased personnel and related costs and other G&A expenses. Net loss was $29.1 million for the recent quarter compared with $10.8 million for the same period in 2017. Net loss per basic and diluted share was $0.71 for the recent quarter compared with $4.81 for the same period in 2017. As of September 30, 2018, cash, cash equivalents and short-term investments were $260.5 million. We continue to forecast that our cash, cash equivalents and short-term investments, together with funds available under our Hercules debt facility, are sufficient to fund our operations through our anticipated approval of TRC101 in the second half of 2020. Finally, looking at the fourth quarter, we anticipate that R&D expenses will be in the range of $30 million to $32 million, as we continue to initiate sites and begin enrolling patients in the VALOR-CKD trial. We estimate that G&A expenses will be in the range of $4.5 million to $5 million, up slightly from the third quarter. With that, I will now ask the operator to open the call for questions. Operator?

[Operator:]

[Operator Instructions]. Our first question coming from the line of Dana Flanders with Goldman Sachs.

[Dana Flanders:]

My first one, and I heard you talk about some of the cost savings of TRC101 and some of the work that you're doing on that front. May be you can just detail exactly what you're planning to share with the payers early next year? How we should think about kind of the benchmark cost for patients with metabolic acidosis and the value proposition for TRC101 without kind of that outcomes data in hand? And then my second question, and I've been getting this a little bit, but can you just share your thoughts on diuretics and just how widely used and effective those are as kind of an alternative treatment for metabolic acidosis?

[Gerrit Klaerner:]

Thank you, Dana. I think the value proposition for patients, for payers and the cost savings is really the key for us. And actually we started the payer dialogues at the time when we discovered the compound in 2013 and '14. So we had multiple interactions, and based on payer feedback -- prior payer feedback, we have now built two iterations of our pharmacoeconomic model, where next year's update will actually have a single source of very large database with events -- with renal events and evolving patient population and also claims data that comes from the same source. Before, what we've done, and I think, how we arrived at the initial cost savings of roughly $2,000 to $2,500 per month, we really used event rates from a large database and literature cost. So that was an initial model that I think was acceptable to initial payer interactions. But this is really the one that has a single source from the same data set, and I think, will be able to provide a quantitative view of the savings to payers by treating metabolic acidosis in the first quarter of next year. Now on diuretics, I think every nephrologist will tell you that their patients have to be on diuretics. Diuretics, fundamentally address the fluid status of patients. They do not treat metabolic acidosis. Diuretics are also max out just for the normal blood pressure and from an edema perspective, and I think that very few patients have room to up titrate diuretics to tolerate the large sodium level that might come from the alkali supplementation. So again, the patients that can tolerate alkali, and we think that is roughly 10% of the total population already on a max dose of diuretics, and so all the other ones, because kidney disease is fundamentally a fluid-overload disease.

[Operator:]

And our next question coming from the line of Jessica Fye with JPMorgan.

[Jessica Fye:]

I was wondering, if you could offer a little more color around how you expect to measure the effectiveness of your awareness efforts prior to actually, kind of, getting the drug out there, when I think you'll be able to tell pretty clearly, physicians, kind of, interest and see the uptake? Are there any metrics that you're going to be, kind of, talking about as you look to assess the success there?

[Gerrit Klaerner:]

Yes. The initial metrics that really surprised us were that we had a booth where again, I think, a very large number of nephrologists, close to -- actually more than 400 nephrologists engaged with us at our booth at ASN. And there were over 1,000 downloads of the app. Plus, I think we will work together with the National Kidney Foundation and with KDIGO to really continue to build awareness for these useful tools and also measure it. So really for us, this -- the ASN was a tentpole event of 2018. And I think the numbers we've seen, show that there's significant interest in learning about this disease that quite frankly, every physician learns about in medical school, but unfortunately due to no FDA-approved treatment, some nephrologists have learned to ignore it. And I think that quite frankly, this is a pretty straightforward job to actually reengage and explain what the impact is of metabolic acidosis on kidney disease progression, on the bone and muscle and on quality of life.

[Operator:]

[Operator Instructions]. Our next question coming from the line of Phil Nadeau with Cowen and Company.

[Philip Nadeau:]

First question on VALOR-CKD study. We've heard from other sponsors who were conducting trials in Europe that it's more harder to get regulatory authority feedback and authorizations because of some of the disruptions associated with Brexit. Are you running into any problems in getting the European authorities to look at the protocol or agreed to it and -- or any other disruptions associated with Brexit?

[Gerrit Klaerner:]

So I'll go back to our clinical group, but I think that so far, we've had very good feedback from regulatory authorities and IRBs. And I have not heard that Brexit would impact us. Plus, quite frankly, when you look at the relative distribution of countries we expect to recruit, is probably a Western Europe as a whole. We have always high hopes, but we have learned to count on fairly small numbers. And so I think we're sufficiently insulated to any impact there, given that they have 35 countries and up to 350 sites. But good question, and I'll get back to you.

[Philip Nadeau:]

That's helpful. And then the second question is on the progress of the drug-drug interaction studies that you're running, particularly dose involving the effect of 101 on pH. How those progressing, when could they complete, and do you have any sense of what sort of dosing, dose suppression, dose interval you'll need to put in the label for pH-sensitive drugs?

[Gerrit Klaerner:]

We'll have information in the first half of next year, but I think that what we've seen to date on direct binding, and we've talked about this before, it's very minimal due to the very MOA of TRC101 that excludes larger ions and molecules. And I think in terms of pH, we expect this to be more transient effect, but more to come, and again, that will be something that we'll update in the first half.

[Philip Nadeau:]

Perfect. And then Jeff, one last question for you. In the past you've guided that the first half of 2019 R&D spend would be less than H2. Is that still your expectation? Or has anything changed in the timing of some of the CMO charges that you anticipate?

[Geoffrey Parker:]

Nothing has changed, Phil, and thanks for the question. So we're not giving full guidance yet for '19. But you should expect that R&D -- if things go as planned, R&D will step down in Q1 versus Q4, given the timing of some of our CMO payments, which tend to be lumpy, because they're made upon delivering not as what is encouraged. So we tend to have lumpier payments in Q3 and Q4. So right now, yes, we're guiding for 30 to 32 on the R&D front in Q4. And we currently expect it should be below 30 in Q1. But we'll give more guidance on that in our year-end call.

[Operator:]

And at this time I'm showing no further questions. I would like to turn the call back over to management for closing remarks.

[Gerrit Klaerner:]

Thank you, all for joining us on the call today. As usual, if you have questions, please don't hesitate to contact Jackie. She can be reached at IR at tricida.com. Thank you.

[Operator:]

Ladies and gentlemen, thank you for your participation in today's conference. This concludes the program, and you may now disconnect. Good day.