Tricida, Inc.

Hello, and welcome to the Tricita Fourth Quarter Financial Results and Business Update Conference. My name is Michelle, and I will be the operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and during the question-and-answer session, if you have a question, please press star then 1 on your touch-tone phone. I would now like to turn the call over to Jackie Kosman, Tricita's Senior Vice President of Investor Relations and Communications. Ms. Kaufman, you may begin.

Thank you, Michelle. Good afternoon, and thank you for joining the Tricita Fourth Quarter 2020 Financial Results and Business Update Conference Call. In today's call, Garrett Klarner, our founder, CEO, and president, will discuss the response from the Office of New Drugs, or OND, of the U.S. Food and Drug Administration, or FDA, to our formal dispute resolution requests. or FDRR, also referred to as the appeal. And Jeff Parker, our COO and CFO, will then discuss our financial results for the fourth quarter and our financial guidance. Please note that in today's call, we will be making various statements that will include forward-looking statements as defined under applicable securities laws. Forward-looking statements include our anticipated activities related to our ongoing clinical trial, VALOR-CKD, which we'll refer to as VALOR, our interactions and communications with the FDA, our plans and expectations regarding the potential pathway to approval of the VMware by the FDA, including potentially available through the accelerated approval program, and our expectations regarding our financial runway. 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 performance or achievements discussed in or implied by such forward-looking statements. Tricita 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 two press releases this afternoon just after the close of market. For copies of our press releases, please go to www.tricita.com and follow the link to our investor relations page. At this time, I'll turn the call over to Gary.

Thank you, Jackie, and thank you all for joining us today. Our primary goal for this call is to discuss the response from the OND to our FDRR that was submitted in December of last year. I'll move right into the decision and the key points from the Appeal Denied Letter, or ADL, from the OND. By way of background, we submitted the appeals solely requesting that the OND find that the magnitude of serum bicarbonate change seen in the TSA301 and TSA301E trial, which I referred to as 301, 301E, is reasonably likely to predict clinical benefit in the treatment of metabolic acidosis in patients with CKD, and that the trial can therefore serve as a basis for accelerated approval. In summary, the OND denied our appeal. In the latter, the OND addressed the issue of magnitude of serum bicarbonate change we had focused on, but also addressed other deficiencies identified in the CRL, namely the reliability of the data from the 30131E trial due to the disproportionate impact of data from a single high-enrolling clinical site on the trial's result and the applicability of the trial results to the U.S. patient population, given that the majority of the subjects in the trial were enrolled in sites outside of the United States or were in regions that the FDA does not consider US-like, such as Eastern Europe. On the issue that was the focus of our FDRR, the OND concluded that the magnitude of the increases in serum bicarbonate levels shown in the 301301E trial were not of sufficient size or durability to establish that treatment with Averma would be reasonably likely to provide a discernible reduction in CKD progression. In addition, the OND found that the intended confirmatory trial of LSDKD was underpowered to confirm a 13% reduction in slowing of CKD progression. That level of risk reduction was derived from two pieces of information in the initial NDA submission, specifically the original predictive MA model and the placebo-subjected LS mean change from baseline to week 52 in serum bicarbonate observed in the 301 trial. I'll come back to the topic of the power of LSDKD a little later. The OND indicated that there were concerns that are particularly relevant in an NDA supported by a single registrational trial, such as assurance of adequate blinding, the disproportionate impact of a single high enrolling site on study results in the majority of sites being in Eastern Europe, where differences in patient management, such as concomitant medication and diet, might affect the treatment response to the VIRMA and raise the concern of the applicability to U.S. patient populations. I would note that with regard to the highest enrolling sites, the FDA has completed an inspection of the site and there was no FDA Form 483 issued from that inspection. Also, with respect to blinding, the OND did not suggest that there was a specific unblinding issue in the 301, 301 trial, but noted concerns around adequate blinding and that while the measures that we put in place to protect the study blind in the trial were reasonable, they may not have optimally protected the blind. The OND also discussed the physical functioning results in the 3131E trial. It stated that the trial results showed improvement in two patient-reported measures, the KDQL physical functioning survey and the repeated chair stand test, and OND noted that the results, if eventually established by one or more additional trials, would indicate a potentially meaningful benefit of the Verima treatment, especially in CKD patients who have physical functioning impairments. However, The OND viewed this data from the 30131 trial with skepticism in the absence of data from a second trial with similar results and noted that both endpoints would require rigorous blinding to support robust conclusions. I would also note that separate from the ADL, we previously received feedback from the Division of Clinical Outcome Assessment that reliance on these physical functional endpoints for approval may require further validation. Now, moving to the path forward. On the feedback from the OND, we believe that we now have greater clarity on the potential path for approval of the Veramer through the accelerated program. The OND suggested that we meet with the division to discuss submission of weak 52 serum bicarbonate results from the full randomized trial population of Valor and that the trial should include a substantial proportion of patients from the United States or from regions with US-like patients. If the results of this analysis from Valor CKD were to demonstrate that the Veramer provides a meaningfully larger treatment effect and that's seen in the 30131E trial, then the VALRA trial, along with the 30131E data, could address the deficiencies raised in the CRL. However, the OND said that whether the extent of increase in serum bicarbonate in any subsequent submissions based on VALRA CKD would support accelerated approval remains a review issue and will, in part, reflect the Division's assessment of the adequacy, i.e., power of VALRA to detect the anticipated treatment effect of CKD progression in a reasonable time frame. Moreover, based on the concerns expressed, we believe that the FDA could require an additional trial or trials to confirm the magnitude durability of effect or applicability to the U.S. population for resubmission of the VARAMA-NDA through the accelerated approval program. One important point that I would like to clarify is that the OND did not review or evaluate the updated powering assumptions for the valid trial included in our protocol amendment from Q4 last year that provide us with greater confidence that the trial will successfully achieve its primary endpoint of slowing CKD progression based on DD40, that is, renal death, ESRD, or confirmed grade-equal 40% reduction in EGFR. We've discussed this during the year-end update call, but to recap, our powering assumptions now rely on a time-dependent predictive model based upon a cohort of more than 24,000 U.S. patients with metabolic acidosis and CKD. The results from this model show an 8.4% lower risk of CKD progression for each one milliquillant high-ass serum bicarbonate. Also, as we've described before, we believe that the magnitude of the VIRMA treatment effect in the 301, 302 study is not best described by the between-group difference in LS means because the data are not normally distributed. In this case, between-group difference in the medians are more appropriate. The week 52 median placebo-subjected treatment effect was 3.15 milliequivalents per liter in 301E. Based on the median treatment effect of that magnitude and using the time-dependent predictive model, we predict a hazard ratio of 0.76 for the ValorCKD confirmatory outcome trial. So with a sample size of 6,900 subjects and 511 primary endpoint events, the trial is 87% power to show a 24% difference in primary endpoint events. Therefore, we believe that VALOR CKD is adequately designed and is currently powered to confirm the clinical benefit of a Veramer treatment in slowing CKD progression. These current assumptions for the powering of the VALOR trial were not considered by the OND in their response to the appeal, and we have not yet received FDA comments on this revised protocol. As such, we continue to believe that the development of a Veramer through the VALOR trial is warranted but we now believe that the timeline to meet the requirements described in the ADL for accelerated approval may not result in the most rapid development path for the Veramer. As discussed previously, our current VALOR protocol includes interim analyses for early stopping for efficacy after accrual of 150 and 250 subjects with primary endpoint events. As of February 22nd, 2021, the VALOR trial has randomized 1,433 of 1,600 subjects with an average treatment duration of approximately one year and has accrued 69 subjects with positively adjudicated primary endpoint events. Based on the current rate of event accrual, we believe the trial will have accrued 150 events in the second half of this year and 250 events sometime around mid-2022. Our approach to the two interim analyses was to keep the majority of the alpha for the final analysis and direct meaningful alpha to the 250 event analysis, with very little alpha directed to a 250 event interim should be seen as a dry run for a 250 event interim. This is in line with the limitations of early interims due to high random variability for so few events. As I said earlier, our powering assumptions yielded a hazard ratio of 0.76 based on the placebo-subtracted treatment effect observed at week 52 in 301E and the time-dependent predictive model. At that hazard ratio, we have a 1% chance of stopping at 150 events and a 21% chance of stopping at interim two with 65% power remaining for the final analysis, which is when 511 primary endpoint events are adjudicated. So the first two interims leave a cumulative probability of stopping by final analysis of 87%. The interim looks for a stopping for efficacy are most relevant in the context of us underestimating the variability to slow progression of CKD. If the true hazard ratio, for example, were 0.70 instead of 0.76, this would double the probability of stopping early from approximately 20 to 40%. Also, to illustrate what we would have to observe at each interim analysis to be successful, if we observe a hazard ratio of less than 0.5 at 150 events, we would stop the trial early. If we observe a hazard ratio of 0.67 or less, we could stop the trial at 250 events. Given some of the academic trials and our own 301e study, we consider interim two a worthwhile look and also well spent. If either of the planned interim analyses were early stopping for efficacy in the VALIDA trial results and positive renal outcomes data, this data could be available before the 52-week serum bicarbonate data from the fully enrolled VALIDA trial suggested by the OND. That is why I said earlier that we believe that the timeline to meet the requirements described in the ADL for accelerated approval may not result in the most rapid development path for Viverama. Given the extended timeline that we now are faced with for accelerated approval, we are evaluating several options with respect to the Valid CKD trial that are focused on obtaining, prior to the end of 2022, additional data on the effect of Viverama on CKD progression, physical functioning, and serum bicarbonate. In addition to the currently specified interim analysis for early stopping flow efficacy I've just discussed, options also include the possibility of stopping the trial early for administrative reasons, which would allow analysis of data using all alpha remaining at that time. To provide an example of this option, if the trial were stopped at 150 events, assuming a true hazard ratio of .76 we would have 39% power, and if instead of stopping at 150, the trial would stop at 250 events, the power increases to 58%. To provide you with an analysis, if a treatment effect is actually larger and the true hazard ratio is 0.7, the power is 59% and 81% respectively for the two interim analyses. Switching from power to observed hazard ratio statistics we could be successful at 150 events if we observed a hazard ratio of 0.72 or at 250 events if we observed a hazard ratio of 0.78. If stopping early for administrative reasons were to yield a positive result, it could potentially form the basis for resubmission of the NDA through the traditional approval pathway. In summary, we believe Data from our VALA trial will be very important in furthering our understanding of the regulatory path for approval of the VARIMER through either the accelerated or traditional approval pathways. I would note, FDA's acceptance of the VALA data in support of an NDA resubmission, including the acceptability of the data from non-U.S. countries or regions which will comprise a substantial proportion of the data from the trial, will ultimately be a review issue. Further, the FDA may require additional clinical data beyond that provided by the VALA trial. In concluding, my remarks, I would like to extend my appreciation to the full team at Tracita for their amazing work under difficult circumstances in 2020. Like all of you on this call, we've had to deal with the enormous complexities of running a business during COVID from remote locations. This has led to days and weeks and months of Zoom calls. Given our regulatory setback, we also had to work through a significant company restructuring last year. While our team today is smaller in number, our commitment to continue to develop the variant for patients with metabolic acidosis remains strong. With that, I will turn the call over to Jeff, our new Chief Operating Officer and Chief Financial Officer, who's got expanded responsibilities in corporate and business development, and he's going to tell you about our financial results and outlook.