Tricida, Inc. (NASDAQ:TCDA) Q2 2022 Earnings Conference Call August 8, 2022 4:30 PM ET
Company Participants
Jackie Cossmon – VP of IR & Communications
Gerrit Klaerner – Founder, President, CEO & Executive Director
Geoffrey Parker – COO, CFO & EVP
Conference Call Participants
Eva Privitera – Cowen and Company
Serge Belanger – Needham & Company
Jessica Fye – JPMorgan Chase & Co.
Operator
Ladies and gentlemen, thank you for standing by, and welcome to the Tricida Second Quarter 2022 Financial Results Conference Call. [Operator Instructions]. As a reminder, today’s call is being recorded.
I will now hand today’s call over to Jackie Cossmon of Tricida. Please go ahead.
Jackie Cossmon
Thank you, Tamika. Good afternoon, and thank you for joining the Tricida Second 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 second 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 the VALOR-CKD renal outcomes clinical trial, including 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 second 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 like to note that we’ve 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’ll turn the call over to Gerrit.
Gerrit Klaerner
Thank you, Jackie, and thank you all for joining us today. As we reported in May, we’ve stopped the VALOR-CKD trial early for administrative reasons, as permitted by the existing study protocol to allow for 6 months of financial runway following the reporting of top line results. We’ve continued to accrue primary endpoint events as clinical trial subjects complete their participation in the study. As of today, the 1480 subjects who were randomized in the VALOR-CKD trial at an average treatment duration of approximately 26.5 months, and the trial had accrued 281 subjects with positively adjudicated primary endpoint events, defined as renal death, end-stage renal disease or greater than or equal to 40% reduction in eGFR.
Given the current event rate trend, we are increasing our estimate for positively adjudicated primary endpoint events in the final analysis. We now anticipate between 285 to 295 subjects with primary endpoint events in the final analysis, which is up from our prior estimate last quarter of 250 to 270 events. We anticipate that the last subjects will complete their participation in this trial in the third quarter, and we plan to report top line results from VALOR-CKD in October 2022.
We have reviewed various hazard ratios in corresponding powering assumptions for VALOR-CKD in prior calls. These calculations are also in our investor presentation on our website. To recap, assuming a true hazard ratio of 0.70 which corresponds to a 30% reduction in veverimer versus placebo endpoint events, and 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 is 85% power.
Switching from power to observed hazard ratio statistics, the trial is expected to meet its primary endpoint with 250 events if the observed hazard ratio is 0.78 or lower. And with 300 events, if the observed hazard ratio was 0.79 or lower. We believe that the VALOR-CKD trial will provide interpretable data to evaluate how treatment is a veverimer impact slowing of CKD progression in patients with metabolic acidosis and CKD.
And before I turn the presentation over to Geoff, I’d like to say that we are really proud of our Tricida team, along with our partner CROs, who are doing a fabulous job ensuring an orderly completion of the VALOR-CKD trial at almost 200 sites in over 30 countries to enable top line data in October.
With that, Geoff will now provide an overview of our financial results for the quarter.
Geoffrey Parker
Thanks, Gerrit. Our second quarter results were in line with our expectations with R&D expense of $16.9 million and $19.8 million for the 3 months ended June 30, 2022 and 2021, respectively. The decrease in R&D expense was primarily due to a decrease in clinical development costs related to our VALOR-CKD trial following the administrative stop announced in May 2022.
G&A expense was $9.8 million and $9.6 million for the 3 months ended June 30, 2022 and 2021, respectively. The increase in G&A expense was primarily due to higher stock-based compensation expense.
Net loss was $28.5 million and $33.6 million, and non-GAAP net loss was $21.3 million and $24.6 million for the 3 months ended June 30, 2022 and 2021, respectively. As of June 30, 2022, cash, cash equivalents and investments were $98.7 million. We believe our current financial resources will fund our planned operations into early in the second quarter of 2023, which is approximately 6 months from the anticipated October announcement of top line results for VALOR-CKD.
With that, I will turn the call over to the operator for questions. Operator?
Question-and-Answer Session
Operator
[Operator Instructions]. Our first question comes from the line of Eva Privitera from Cowen.
Eva Privitera
Congrats on the execution of the trial. So the event accrual seems to be happening faster than what was previously guided, which is great. What do you think is accounting for this faster rate? And is it still within the range of what you had previously modeled?
Gerrit Klaerner
Yes. Eva, thanks for the question. This is Gerrit. Yes, it’s spot on. It’s right in — I think in the middle of what we expected over time. There was some uncertainty as we bring people in for the last visit in shorter intervals, if we would still see the same number of events that we’ve seen pretty consistently over the last 1 year, 1.5 years of the trial, but that’s clearly the case. So we continue to stay on track.
Eva Privitera
Excellent. And a second question. So you list the 0.76 hazard ratio, and that’s based on the serum bicarb effect seen in the 301 trial and the Tangri model developed a few years back. There was a paper published last year by Tangri that draws from a larger database of patients. Is 0.76 still kind of the base case assumption? Or have you made any — can you point us to anything to point to possibly different hazard ratio?
Gerrit Klaerner
Yes, I think we have a couple of different buckets here that we draw from, right? And one you just described, and that was really important in the context of accelerated approval, where we obviously wanted to connect the serum bicarb effect and then ultimately, the expected outcome benefit. Now the other bucket are really sort of some of the smaller academic trials with the BRIO study, where interventions like oral — alkali or extreme low protein diets in patients who could tolerate these interventions were studied in single-center trials, and there were hazard ratios that were much, much lower. It’s also in our slide deck — investor slide deck. And there, basically, you’re looking at hazard ratios in the 0.25 to 0.5 range.
And then, of course, we had our own study, where we had a prespecified safety analysis that is quite different from the renal endpoint, but had all-cause mortality and dialysis is 50% eGFR decline in the TRCA-301 — 301E study. And there, we saw basically also a fairly significant and small hazard ratio of, I think, it was a 65% reduction in those DD50 events. Again, not a renal endpoint and very, very small numbers. But the way we think about it, we look at all 3, and I think that gives us comfort that we — ultimately, when we take a look that we are below the 0.78 or 0.79 in terms of hazard ratio.
Operator
Your next question is from the line of Serge Belanger from Needham.
Serge Belanger
Just a couple for me. I guess, first, just looking forward to October and thinking of the data readouts, are we just going to see the top line, the primary endpoint? Or should we also see some of the secondary endpoints at that time? And then thinking of those secondary endpoints, which ones are the most important for the — what you project the label to be for veverimer? And given the stoppage of the VALOR trial, just curious whether you think the — the study is powered well enough to see a stat sig difference on some of these secondary endpoints?
Gerrit Klaerner
Thanks for the question. Yes. So we — again, we are right now, sort of we’re busy, we’re taking down, obviously, the trial in manner and then ultimately locking the database, analyzing the data and then obviously sort of communicating as soon as possible. The primary endpoint is really it, right? Let’s be very clear in terms of FDA approval, in terms of the claim for slowing of CKD progression, we are really laser-focused on the DD40 endpoint. Now we do have other endpoints that describe the storing of CKD progression. There’s obviously the DD50. There are the individual components. The eGFR are slow, and they are — I think they’re all important. And the idea is hopefully that if we are successful on the primary, there’s a good chance we also can see some interesting things on the individual components and some of the other related endpoints. So to me, personally, at least, those are — that’s really from a labeling perspective, from an FDA discussion perspective that this is really where the rubber hits the road.
Now we do have end points on physical functioning, and obviously, that’s really very important for patients. And I think we are, of course, interested in the KDQOL, which is the patient reported outcome and also the repeated chair stand test. I think it’s less clear. Those are not basically the same in terms of proven end points from a regulatory perspective, but they’re obviously very, very important for patients and how a patient [indiscernible] function. So those are really the 2 — the 2 buckets that we are focused on and that are important to us. Others around mortality and hospitalizations, to be clear, those are all, I think, important endpoints. We did run this against the backdrop of a 100-year pandemic, right? So I think that’s always a question in terms of what type of noise is generated in terms of hospitalizations and overall mortality. But that’s why we’re paying a lot less attention at this stage to some of those other end points.
Operator
Your next question is from the line of Jessica Fye with JPMorgan.
Jessica Fye
Maybe asking the first question a little bit of a different way. How much separation between arms on serum bicarb do you think is needed to have an impact large enough to achieve a hazard ratio no higher than 0.79?
Gerrit Klaerner
Yes. I try to answer that if we were still pursuing accelerated approval. Yes, to me, basically, we expect obviously, a statistically significant difference in serum bicarb between active and placebo patients. But I think this overly quantitative view — as I said before, it was really important to get initial approval on the basis of the which we didn’t. And so I think that to us, I think it’s much more important to have a larger number of events that we are observing right now. So that if we were sitting here just with 200 events or so or 230 events, that would make me, I think, a little bit more nervous than sort of an expected serum bicarb difference because you have random — the fewer events you have, the more random variability plays into this. And so with us having 281 events as of today, I think that really gives us a chance to truly see the effect. I think we stopped right on the time of the CRL or the ADL, we stopped kind of having this very quantitative view of serum bicarbon outcomes.
Jessica Fye
Got it. And just so better when in the third quarter might you finally stop counting events? It seems like every update we get the projected number of events goes a little bit higher. And so I want to make sure I’m thinking about that potentially happening one more time.
Gerrit Klaerner
No, that won’t happen because this is the last call before data.
Operator
Our final question comes from the line of Madhu Kumar with Goldman Sachs.
Unidentified Analyst
This is Rob on for Madhu. So I was just wondering what information will be disclosed in the VALOR-CKD top line data? And then beyond the top line data, are there any other gating factors for an NDA submission?
Gerrit Klaerner
Rob, as I said, we basically sort of obviously are going to disclose the primary end point. And depending on how many we get to analyze the secondary endpoints as well. And ultimately, I think the important piece here is also the primary end point and the individual components. So to me, everything else as I think is interesting, but not critical, right? And then, of course, safety. I mean, I think this is a multiyear study in a large group of patients. And so we’ll have, obviously, safety data. And as you know, ultimately, what this comes down to from an approval perspective is risk benefit. So I think at top line, our goal is to give a clear picture of safety and efficacy. So that I think this will ultimately then inform the risk benefit that is underlying the approval decision. And as you know, we are very data driven, and we move very quickly. So we will basically include as much as we can at the time point of communicating top line data.
Operator
At this time, there are no questions. I will hand the call back over to the presenters for any closing remarks.
Jackie Cossmon
Thank you all for joining us today. And as always, if you have additional questions, don’t hesitate to e-mail us at ir@tricida.com. Thank you, and goodbye.
Operator
This concludes today’s call. Thank you for joining. You may now disconnect your lines.
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