TCDA (2022 - Q1)

Good day and thank you for standing by. Welcome to the Tricida First Quarter 2022 Financial Results Conference Call. I would now like to hand the conference over to your speaker today, Jackie Cossmon of Tricida and please go ahead. Jackie C

Thank you, Didi. Good afternoon and thank you for joining the Tricida first quarter 2022 financial results and business update conference call. In today�s call, Gerrit Klaerner, our Founder, CEO and President, will provide an update on the ongoing VALOR-CKD renal outcomes trial and discuss our business progress. Geoff Parker, our COO and CFO, will discuss our financial results for the first quarter and review our financial guidance. 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 our anticipated activities related to our ongoing VALOR-CKD renal outcome clinical trial, including early termination of the trial, anticipated endpoint events, accruals and the estimated timing for receipt of top line data as well as our expectations regarding our financial runway. 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. We issued our first quarter financial results press release this afternoon just after the close of market. For copies of our press release, please go to www.tricida.com and follow the link to our Investor Relations page. I would also note that we have posted an updated slide presentation on the Investor Relations portion of our website that includes updated information from our press release and call. At this time, I�d like to turn the call over to Gerrit.

Thank you, Jackie and thank you all for joining us today. We continue to make good progress on the execution of our VALOR-CKD renal outcomes trial. As of May 9, the 1,480 subjects randomized in the trial had an average treatment duration of approximately 25 months. The trial has accrued 233 subjects with positively adjudicated primary endpoint events defined as renal death, end-stage renal disease, ESRD, or greater than or equal to 40% reduction in estimated glomerular filtration rate, eGFR. As we previously reported, based on our financial runway, we intend to stop the VALOR-CKD trial early for administrative reasons in the second quarter of 2022 with continued accrual of primary endpoint events into the third quarter of 2022. Based on the current event rate trend, we are updating the anticipated number of subjects with positively adjudicated primary endpoint events in the final analysis to 250 to 270. We anticipate reporting top line results from the VALOR-CKD trial early in the fourth quarter of 2022, which will allow for approximately 6 months of financial runway following the announcement. Assuming a true hazard ratio of 0.70, which corresponds to a 30% reduction in the veverimer placebo endpoint events, if there are 250 events in the final analysis, the trial has 78% power. And if there are 300 events in the final analysis, the trial has 85% power. Switching from power to observed hazard ratio statistics, we could be successful with 250 events, if the observed hazard ratio is 0.78 or lower and with 300 events if the observed hazard ratio is 0.79 or lower. We believe that the VALOR-CKD provides interpretable data to evaluate how treatment with veverimer impacts slowing of CKD progression in patients with metabolic acidosis and CKD. With that, I will turn the presentation to Geoff for an overview of our financial results for the quarter.

Thanks, Gerrit. Our first quarter results were in line with our expectations with R&D expense of $18.5 million and $32.2 million for the 3 months ended March 31, 2022 and 2021, respectively. The decrease in R&D expense was primarily due to decreased activities in connection with our veverimer clinical development program related to the manufacturing of drug substance and other clinical development costs. G&A expense was $9.2 million and $9.9 million for the 3 months ended March 31, 2022 and 2021 respectively. The decrease in G&A expense was primarily due to lower legal and consulting fees. Net loss was $29.6 million and $53.4 million, and non-GAAP net loss was $22.9 million and $38.3 million for the 3 months ended March 31, 2022 and 2021, respectively. As of March 31, 2022, cash, cash equivalents and investments were $123.7 million. We believe our current financial resources will fund our planned operations into early in the second quarter of 2023, which is anticipated to be approximately 6 months from the announcement of top line results for VALOR-CKD. With that, I will turn the call over to the operator for questions. Operator?

Thank you. Our first question comes from Phil Nadeau of Cowen & Company. Please proceed.

Good afternoon. Thanks for taking our questions. First, a financial question for you, Geoff. On the R&D expense, it was a bit lower than we were modeling, though it does seem like if this is your consistent R&D expense, that�s how you get to Q2 �23 cash runway. So, are we fair to assume that R&D will be at the � at similar levels kind of through at least through the end of 2022?

So Phil, R&D for Q2 and Q3 is estimated to be similar to Q1 with an uptick in Q4 probably somewhere between $8 million and $12 million uptick in Q4. So roughly speaking, that�s how the year will trend out.

That is very helpful. Second, on VALOR-CKD.

By the way, just to add there, that�s due to the fact that our contract with Patheon is somewhat lumpy. So that�s why you see that tick up in the fourth quarter. In fact, Patheon ticks up then. And of course, if things go as planned, the VALOR trial will be ticking down at that time.

Got it. Okay. That helps a lot with our modeling. Second on VALOR-CKD, it looks like there were maybe 16 events that were accrued over the last 2 months, which is a little bit higher than � in the past, you have suggested maybe 10 to 11 events per month. Is there any identifiable reason behind that uptick or is it just the randomness in event rates and dealing with the trial, the size of VALOR-CKD?

This is Gerrit. No, I think we � in the last 2 or 3 months, we do see more events. We had, I think, just over 20 events a month before in March and then now, as I said, 16 in April. I think it�s still a modest uptick, but we have actually � that�s why we updated the projected number of primary endpoint events in the final analysis. So, we went from 240 to 255 now to 250 to 270. To accommodate this, I would say the robustness that we are seeing, I wouldn�t say uptick.

Got it. Okay. And then last question again on VALOR-CKD, in the slides that you referenced, it calls out, as you suggested, the hazard ratio � observed hazard ratio of 0.78 to 0.79 for statistical significance based on events between 250 and 300. The slides talk about a � like 10,000 simulations were used to calculate those numbers. Can you maybe go in a bit more detail as to how exactly you did calculate the observed hazard ratio that�s necessary for specific benefit of VALOR-CKD?

Basically, if you look at the random variability in a simulation where tens or hundreds or thousands of times you run the trial and look at the results. And then you look at the threshold that you need to be above or in the case of hazard ratio, below in order to be statistically significant. And I think what�s really, I think, consistent with what we said before is that 250 events is really a bit of a plateau. As you can see, every 50 events thereafter gives you may be around 0.01 of higher sort of threshold for hazard ratio. And remember, with 511 events, we would have been able to have statistical significance with I think it�s 0.83, so a hazard ratio of 0.83. And so you are seeing this in this very table and I think it�s helpful to add the 300 event column here to illustrate sort of the potential range of scenarios.

In those simulations, is it statistically significant like every time at that hazard ratio or is there some threshold like at the hazard ratio, it�s statistically significant more than 51%?

Nothing is 100%. I think they always give you 99% or something like this. And so I can check back with our statisticians, but those are conservative, I think estimates based on these simulations.

So, the vast majority of the time it would be static. Perfect. Thanks for taking our questions.

Thanks a lot.

Thank you. Our next question comes from Jessica Fye of JPMorgan. Please proceed.

Hey, good afternoon. This is for Jess. Thank you for taking our questions. So, couple of from us, assuming positive top line results, is there any guidance you can give us regarding how you would prepare for a potential filing and launch further down the line internally? And then how would you be thinking about like potentially extending the financial runway assuming part of top line result? Thank you.

So, with regards to the first part of your question, were you asking about the timing of resubmission and PDUFA date?

Yes. And then also, is there anything you are preparing or is thinking about like to prepare for the potential launch internally?

Yes, yes. So, we are always updating and reviewing our commercial plans, commercial assumptions. So we are doing that over the next few months as well as we did last summer. So, while we don�t expect to have any significant spend on commercial prior to data, we are doing background work to update our plans for commercial. With regards to timing overall towards potential commercial launch, presuming we have the announcement of the VALOR study early in Q4, we would anticipate filing or resubmitting the NDA in Q2 of �23 and have a potential PDUFA date in Q4 of 2023. That�s a 6-month review for a resubmission. And then roughly speaking, we would have a launch in Q1 of 2024. So presuming positive data on VALOR-CKD, we will put those plans into motion later this year. With regards to capital and runway, as I discussed earlier, we have sufficient capital based on our current plans through the first quarter of next year into the early part of Q2 of 2023. We also have in place warrants that were related to our direct equity investment at the end of last year. So, we have 7 million warrants outstanding with an exercise price of 11 and those warrants would expire 6 weeks after the announcement of VALOR-CKD data if, in fact, our stock price trades above $15 per share with a certain volume requirement. But assuming a good reaction to the VALOR positive data, we would have the opportunity to bring in $77 million through the exercise of those warrants, which would take us into late 2023 with regards to capital. And I think with regards to any further additions to capital, we will address that after we receive and announce the VALOR-CKD data.

Okay. Operator?

Thank you. Our next question comes from Madhu Kumar of Goldman Sachs. Please proceed.

Hey, guys. Thanks for taking our questions. This is Rob on for Madhu. I was just wondering is there anything that would change your expectation for the top line data, like quicker accrual of events or slower or is that already set in stone?

Yes. I think just to remember, the � I think the top line data is driven by our balance sheet and really sort of what we have discussed around the administrative stuff that this is really 6 months of cash left. And it�s not driven by targeting a certain number of events. So event accrual has really nothing to do with the timing of the administrative stuff and correspondingly, the timing of top line data.

Okay. Thank you. And just one other question, what would be the cadence for the data release post the top line?

I think very traditional. I think we will obviously look at the primary endpoint and that � and then as we have said between what�s appropriate to put into the initial press release, what�s appropriate in � I think if it�s positive data, obviously, into one of the top journals, we are not going to reinvent the playbook here.

Alright. Thank you.

Thank you. At this time, I�d like to turn it back to Jackie Cossmon for closing remarks.

Thank you, Didi and thank you all for joining us today. As always, if you have additional questions, please don�t hesitate to e-mail us at ir@tricida.com. Thank you and goodbye.

Thank you. This concludes today�s conference call. Thank you for participating and you may now disconnect.