Tricida, Inc.
Q4 2018 Earnings Call Transcript

Published: 28 Mar 2019

[Operator:]

Good day, ladies and gentleman, and welcome to Tricida TRCA-301E Clinical Trial Results and Financial Results Conference Call. At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions]. As a reminder, this conference call maybe recorded. I would now like to introduce your host for today's conference Ms. Jackie Cossmon. Ma'am you may begin.

[Jackie Cossmon:]

Thank you. Good morning, and thank you for joining the Tricida conference call. In today's call, Gerrit Klaerner, our CEO, President and Founder will discuss TRCA-301E clinical trial results that we announced this morning as well as our business progress. Geoff Parker, our CFO will then discuss our upside debt facility with Hercules, our financial results for the quarter and full year 2018 and provide an overview of our financial outlook. 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, 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 applied 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 releases that were issued prior to this call, please go to tricida.com and follow the link for our Investor Relations page. At this time, I'd like turn the call over to Gerrit.

[Gerrit Klaerner:]

Thank you, Jackie, and thank you all for joining us today. We previously reported that we expected the results of our 301E extension trial in the first half of 2019. I am pleased to report that we now have the results of the trial and that it met its primary and all secondary end points. Earlier today we issued a press release that provides greater detail concerning the design of and the data generated in the trials. Before I walk you through the results I want to highlight the fact that we saw a surprising upside beyond the expected good safety profile and long-term durability of effect of TRC101 on the surrogate blood bicarbonate endpoint. Following 52 weeks of treatment we have observed evidence of clinical benefit in TRC101 treated subjects including reduced all cause mortality, slowing of CKD progression, and improved physical function. These observations are in line with the underlying patho-physiology of metabolic acidosis and its impact on bones, muscles, and kidney health. The 301E trials was a blinded 40 week extension of the 12 week 301 trial which randomized 217 patients with non-dialysis dependent CKD and metabolic acidosis. 196 subjects consisting of 114 subjects in the TRC101 group and 82 subjects in placebo elected and were qualified to continue in the extension trial. Let me start with the fact that we observed a clean safety profile for TRC101. The primary endpoint of the 301E trial was assessment of the long-term safety profile of TRC101 versus placebo. We observed fewer discontinuations, fewer serious adverse events, and a comparable rate of GI adverse events on TRC101 versus placebo. Specifically 2.6% of TRC101 versus 9.8% of placebo treated subjects discontinued prematurely. The incidence of serious adverse events was 1.8% in the active group versus 4.9% in the placebo group and no serious adverse events were said to be related to [study drug] [ph]. Gastrointestinal adverse events occurred in 21.4% of patients in the TRC101 group and in 25.9% of patients on placebo. We observed a sustained increased in blood bicarbonate in TRC101 treated patients. Two of the four secondary endpoints assessed the durability effect of TRC101 by comparing the changes in blood bicarbonate between active and placebo treated subjects who have completed the 52 week treatment period. 63% of the active subjects exhibited an increase in blood bicarbonate level of at least 4 milligrams per liter or achieved a blood bicarbonate level in the normal range compared to 38% of placebo subjects. That's represented P value of 0.0015. The mean change in blood bicarbonate from baselines to end of treatment and the TSC101 group was 4.7 milligrams per litre compared with 2.7 milligrams per litre in the placebo group representing a P value of 0.0002. The final two secondary endpoints evaluated how treatment with TSC101 might affect how patients [fear] [ph] and function. If you recall the basic physiology behind metabolic acidosis a build up of acid can contribute to reduced muscle mass and impaired physical functions. Physical function was assessed indirectly with self-appointed responses to the KDQL physical function survey and measured directly through a repeated chair stand test. Let me return - the placebo adjusted improvements in favor of TRC101 treated subjects in the two [indiscernible] physical function at week 52 were both highly statistically significant with a P value of less 0.0001 and approximately doubled compared to the observed results at week 12. We believe the results from the KDQL Physical Functioning Survey and the repeated chair stand test both provide evidence of improvement in physical function and these placebo adjusted effects exceeds the minimally clinically important difference thresholds reported in the scientific literature. As you can tell I can't wait to get to this next part that really deals with one of the most unexpected and exciting results of this trial. We included a pre-specified comparison of the TRC101 and placebo groups for the time to the composites clinical endpoint of all cause mortality, dialysis, or greater equal 50% decline in eGFR. We referred to this as a DD50 event. Over the combined 52 week treatment period the annualized DD50 incidence rate was 4.2% in the TRC101 group plus 12% in the placebo group. This represents a statistically significant P value of 0.0224. There were no deaths in the TRC101 group and four placebo patients died. Each group had one subject initiate dialysis. Although the 301, 301E clinical trials were not designed or powered to assess all cause mortality or the progression of CKD outcomes we nevertheless observed a 65% reduction in the annualized DD50 event rate for TRC101 treated subjects versus the placebo group. So let me sum up where we are based on our top line analysis of the extension trials. The combined 52 week results far exceeded our expectations. We did not anticipate that we would observe any evidence of clinical benefits beyond the increase in blood bicarbonate in patients treated with TRC101 until the readout of our VALOR-CKD post-marketing trial somewhere in the 2022 to 2023 time frame. We remain committed to submitting our INDA at an accelerated approval program in the second half of 2019 and look forward to the results of VALOR-CKD confirmatory post-marketing trial. While we do not anticipate any change to the size or design of the VALOR-CKD trial we feel good about what we've learned in the 301E study regarding safety and efficacy, increasing our confidence for successful VALOR-CKD trials. Just as a reminder the ongoing VALOR-CKD trial is a time to event study. The subjects will be followed until we have accrued the target number of primary endpoint events which we estimate will be approximately four years following full enrolment. Our sample size of 1600 subjects was based on the assumption of a 30% to 35% reduction in renal meds. Furthermore the protocol specifies an interim analysis when at least half the planned number of primary end point events have been accrued which we estimate will be approximately two to three years after full enrolment. At such time the trial may be stopped early for efficacy, the sample size may be increased or the trial may continue without changes. We have now successfully completed all of the clinical trials that we plan to complete prior to submission of our NDA through the FDAs accelerated approval programs. We are on track for the submission in the second half of 2019. Next I would like to highlight the publication of our Phase 3 TRC101 clinical trial results in The Lancet, a leading independent journal of medical journals. This is an important milestone for Tricida and shows that interest in metabolic acidosis extends beyond the nephrology community. I would like to thank our Tricida authors and our opinion leaders Dr. Wesson, Bushinsky, Tangri, and Mathur. Now I'd like to provide an update on our DDI studies. Our drug-drug interaction studies was guided by the underlying mechanism of action of TRC101, our in vitro studies and FDA interactions and we determined it was appropriate to evaluate aspirin, [indiscernible] furosemide, and warafin in Phase 1 clinical trials for potential DDI effects. Based on the results of our DDI studies we do not believe we need to recommend dosing separation for any drugs co-administered with TRC101. Before I turn the call over to Geoff let me say how pleased I am to welcome Susannah Cantrell to Tricida as our Chief Commercial Officer. Susannah comes to us with over 20 years of commercial industry experience across sales, operations, marketing, and global commercial strategy including executive and senior level roles at Gilead, Genentech-Roche, and GSK. Susannah has launched multiple successful therapeutic products at Gilead and Genentech and she brings the breadth and depth of strategic and operational experience to Tricida and has already hit the ground running. Our pre-launch activities are underway including operational logistics, managed market activities, physician surveys, patient during the analysis, refined healthcare economics analysis, and much more. We are truly delighted to have Susannah join the team. And now I'll ask Geoff to discuss the new Hercules amendment which we were also pleased to announce this morning as well as to provide you with a financial update and our cash guidance for 2019.

[Geoffrey Parker:]

Thank you Gerrit. Before I turn to the financial results I'd like to echo Gerrit's excitement regarding the positive 301E results. We recognize that these compelling results could have warranted an independent call but we wanted to update you at the earliest possible time which happened to coincide with our financial results call. Let me now turn to our financial highlights. I am pleased to report that we have completed an amendment to our Hercules debt facility. This amendment increases the total amount available under our current debt facility to up to $200 million and significantly extends the maturity of the facility. The key strategic advantage to this new facility is that it extends our financial runway such that we are now able to fund our operations into 2021 which would cover the initial commercial launch period of TRC101. Under the terms of this amendment the $40 million currently drawn under the existing debt with Hercules remains outstanding. Additional traunches of $20 million and $15 million are available for drawdown prior to December 15, 2019 and December 15, 2020 respectively. An additional traunch of $75 million will be available for draw down prior to December 15, 2020 subject to FDA approval of TRC101. A final traunch of $50 million will be available for drawdown prior to December 15, 2021 subject to approval by Hercules. The final maturity date of the amended debt facility is initially four years from closing and can be extended to five years subject to the FDA approval of TRC101 and when the final traunch is drawn. Let me now turn to our financial results for 2018 that we reported today. Research and development expense was $22.7 million and $17.8 million for the three months ended December 31, 2018 and 2017 respectively. And $85.6 million and $35.9 million for the years ended December 31, 2018 and 2017 respectively. The increases in research and development expense in the three months and full year periods of 2018 compared to the prior year were primarily due to increased activities in connection with our TRC101 clinical development program including increased drug substance manufacturing as well as increased personnel and related costs. General and administrative expense was $6.1 million and $2.9 million for the three months ended December 31, 2018 and 2017 respectively and $18 million and $11.2 million for the years ended December 31, 2018 and 2017 respectively. The increases in general and administrative expense in the three months and full year periods of 2018 compared to the prior year were primarily due to increased administrative costs supporting the increased activities in connection with our TRC101 clinical development program including increased personnel and related costs and other G&A expenses. Net loss was 27.8 million and 20.6 million for the three months ended December 31, 2018 and 2017 respectively and a 102.8 million and 41.3 million for the years ended December 31, 2018 and 2017 respectively. As of the end of 2018 cash, cash equivalents, and investments were $243.4 million. Let me now turn to our financial outlook, with regard to financial guidance for 2019 we estimate that cash expense will be between $135 million and $145 million. As I previously stated we expect that our cash and investments as of the end of 2018 together with our borrowing capacity under our amended Hercules debt facility will enable us to fund our anticipated operating expenses and capital expenditure requirements into 2021 which would cover the initial commercial launch period for TRC101. Operator we are now ready to open the call to questions.

[Operator:]

[Operator Instructions]. And our first question comes from Jessica Fye from JP Morgan. Your line is open.

[Jessica Fye:]

Hey there, good morning. Thanks for taking my questions. I wanted to ask about the placebo one and the trial and the extension piece, it looks like they sort of did a little bit better than in the original portion of the study. Can you talk about why that might be the sort of effective at being a completers group of placebo patients?

[Gerrit Klaerner:]

Hey Jessica, yeah it is exactly right. We only look at the ones that actually complete 52 weeks and of course they did not do really well because four of them died and many more actually progressed in terms of dialysis. But their serum bicarb results is basically impacted because we only look at the ones that complete 52 weeks and in one group hardly anybody drops out and in lot two drop out in the other, that's where the imbalance comes from.

[Jessica Fye:]

Okay, great. And can you also help us think about the mix of components of the endpoint in the outcomes trial, here we had some [decks][ph] on dialysis initiation, etc. Can you talk about how you expect that kind of mix of endpoints to play out longer-term?

[Gerrit Klaerner:]

Yeah, I think we obviously as you know we did sort of multicenter line that extension trial or placebo group where we wanted to confirm our surrogate effect in terms of efficacy and safety. So the events that we looked at were pretty hard clinical outcomes, all cause mortality, dialysis, and losing 50% of the kidney function. And that's really sort of from a safety consideration and then we saw the surprising difference in just one year. In our VALOR CKD trial we obviously have a traditional time to event analysis where we are looking at not all cause mortality but renal death, dialysis and a 40% eGFR reduction that occurs more frequently than 50% really. So really what we're reporting here out of all the safety Observations in this pre-specified analysis those are quite frankly even harder endpoint than VALOR CKD but they make us feel pretty good that I think metabolic acidosis causes death and renal progression.

[Jessica Fye:]

Okay, got it. Did you analyze this data based on the 40% worsening?

[Gerrit Klaerner:]

No.

[Jessica Fye:]

Okay, and just one last one, the causes of the deaths here, do they appear to be kidney disease related?

[Gerrit Klaerner:]

Yeah, one was actually renal death and that's defined as a patient who basically refuses dialysis. And another one had significant eGFR reduction before the patient died. But under the VALOR-CKD definition one of the four was renal death.

[Jessica Fye:]

Okay, got it. Thank you.

[Operator:]

[Operator Instructions]. And our next question comes from Laura Christianson from Cowen. Your line is open.

[Laura Christianson:]

Hi guys, thanks for taking my question and congrats on the data. I just want to hone in a little bit on what you mentioned briefly about the drug-drug interaction studies. You mentioned no need for dose separation for any drugs co-administered, is that what you will have in the protocol for VALOR-CKD as well and how do you expect that to influence the tolerability of the drug if at all?

[Gerrit Klaerner:]

Yeah, the VALOR-CKD study started before we had completed all of our DDI studies so, that's a different cup of tea. But I think from an NDA submission perspective that's a conclusion that we will just basically submit in our NDA.

[Laura Christianson:]

Got it, okay. And when - I know you've already kind of rehashed the estimated pricing based on conversations with payers, do you anticipate that changing at all with the results that you've released today with the composite end point?

[Gerrit Klaerner:]

Yeah, I think there's a big difference between telling people to extrapolate our results to outcomes and having outcome results. It is as simple as that, and we think that the data that we have in the small study is really a paradigm shift in terms of the understanding of metabolic acidosis and potential treatment with TRC101. So, we are obviously very data driven and we will have discussions with payers but as you know there are not many cardio renal trials that have shown multiple positive outcomes ranging from reduced all cause mortality to reduced progression of kidney disease and the patients renal function better. So, yeah we think that that's going to move the needle.

[Laura Christianson:]

Great, that's helpful. Thanks

[Operator:]

Thank you and I am showing no further questions from our phone lines and I'd now like to turn the conference back over to Gerrit Klaerner for any closing remarks.

[Gerrit Klaerner:]

Thank you operator and thank you all for joining us today. We are very pleased to be able to share real time the 301E data with you on today's call. We will be reviewing this further with our key experts. We also plan to submit these results of publication in a major medical journal. We have significant work ahead of us to submit our NDA, expand our disease awareness campaign and initiate our commercialization plan. Given these results we're more eager than ever to have physicians, patients, and payers understand the value of treating metabolic acidosis. We look forward to updating you on our progress and as always if you have questions please don't hesitate to call Jackie. Thank you and goodbye.

[Operator:]

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program. You may all disconnect. Everyone have a wonderful day.