Q3 2019 Earnings Call
Ladies and gentlemen, thank you for standing by and welcome to the Tracy does third quarter 2019 financial results Conference call. At this time all participants are in listen only mode. However, after the speakers presentation. There will be a question and answer session to ask a question during the session you'll need to press star one on your telephone as a reminder, taste broke.
Grandbaby recorded and now I'd like to introduce your host for today's program, Jackie Cosman, Vice President of Investor Relations and Communications. Please go ahead.
Thank you Jonathan good afternoon, and thank you for joining the Tracy that third quarter financial results conference call in today's call declared or our CEO , President and founder will discuss our business progress and just Parker. Our CFO will then discuss financial results for the third quarter.
Please note that in today's call, we will be making very statements that include forward looking statements as defined under applicable securities laws.
<unk> looking statements include statements regarding our future development and commercialization plan the conduct of our valor CKD confirmatory post marketing trial recruitment milestones anticipated activities related to our indeed filings, including the difficulty advisory and Advisory Committee topics.
Turning to guidance.
With that are not historical facts.
Managements 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 fourq implied by such forward looking statements.
I see that 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, but are described in our filings with the Securities and Exchange Commission for copies of our press releases that were issued prior to this call. Please go.
Www Dot Tracy Dot com and follow the linked to our Investor Relations page at this time I'd like to turn the call over together.
Thank you Jackie and thank you all for joining us on todays call. Let me move right into the most important news something penalties.
I used to report that all of it very much India has been accepted form your body up here and that accelerated approval program, but no filing the view issues identified.
The applications on that one of you got a division of cardiovascular and renal park.
Dan I believe you designation enough to do for Goldade August 22nd 2020.
I am I, not finding accept and I'm like Saudi to pull them underscores the fact that metabolic up at doses as a serious condition and as a very much at approved when it has an unmet medical need.
Given the commercial strategy outlined at our recent that's hurting the August 22nd 2020 maneuver they've been able to launch at the beginning of fourth quarter off next year and provide us with a full quarter over there myself and 2020.
Do you have the I've also indicated that they are currently that the car. They plan to hold an advisory committee meeting or outcome to discuss the application.
We anticipate the outcome would likely occur in the first half of 2020.
No the topic of discussion closer to the meeting that.
Given that we're pursuing up what country disease, modifying indication and he could be utilizing the accelerated approval program. We welcome the opportunity.
Apparently to present, the underlying Russian though and the consumer body of evidence supporting the treatment of medical I got the doses slows the progression of kidney disease.
Furthermore, we'll be ready to walk through all of their clinical data, including resolves beyond the surrogate endpoints such as improvements in all the patient fields and functions and the impact on the progression CKD.
We continue to validate the data from all phase three trials in cooperation with thought leaders in the nephrology field and this is Dan the implications of treating metabolic doesn't always and.
No just for patients with security.
An interesting concept has emerged in the academic literature that describes he could be as a clinical model premature aging the CKD patients experiencing many of the complications of aging, but a younger ages then the general population.
The elevated rates of aging related disorders, including cardiovascular disease, Sarcopenia and family.
As a major problem the calls and parents is a function leads to significant morbidity, including high rates of fog infections and has also been active on death.
Therefore, preserving physical function is critical in patients with seeking.
Working with our commitment abramovitz wouldn't associate professor of medicine at the all that I'm, Sorry College of Medicine. We recently performed additional analyses on the physical function improvement, we observed a bit to them and how I feel when he long term extension trial.
Well be submitting this work a major defaulted Congress. This month follow that share a couple of topline results with you today.
First sector around its phones that are based on 45%.
Oh study population was lower in performing to repeated share fantastic and the average 80 to 89 year old. Despite an average age of approximately 62 years.
Second the meaningful movement to repeat a chance Santos time observed in drama treated patients in the three to one study 4.32nd was greater than a different than test time between individuals in the eighties and those and the sixties.
Therefore, looking after the dog coolant pumps security as a model of accelerated aging the effect of one year of treatment was very much longer Peter Tristan to perform and appears to be equivalent to approximately a 20 year reduction and age.
Now I'd like to provide you an update on the dollars because he post marketing trial.
This is a large outcome call. It is being conducted in 33 countries at approximate events have you thought.
At this point close to 95% of all got it sounds like an open for equipment.
We anticipate Randomizing 16 on that subject in the trial and we believe heavy on track to complete enrollment on mid 2020.
Let me now turn caused significant presence at the American Society of pathology kidney week meeting.
The meeting provided a great venue to reach a large audience, but our metabolic I've known as a disease awareness campaign.
And then the interest at exhibit Booth was significant and the Faade, it's highly engaged over.
Over 1000 to follow this and health care providers. This awful.
Intact at that a medical science liaison downloaded the enough pops up and viewed video presentations by experts discussing the pathophysiology and kinda consequences of metabolic after doses and the importance of assessing physical functioning in patients with securities.
Oh, I kind of pick put in patients who are very well that Steve.
That all of them along kind of extension data that was published in the land, but that's all data on the mechanism of action off of that.
Also for the first time included a medical affairs section in our booth, they provide a form to answer questions about the there my psychotropic.
The attendance was significant but unsolicited requests coming up only following the presentation of all long term extension data at the meeting, but also driven by unaffiliated third party presentation on the Verma data, suggesting it as a promising new therapies for the potential treatment metabolic hazardous.
The serious consequences of medical I got the doses were quantified and three new studies sponsored by trying to see that said, we're also present at the meeting.
These studies a cohort of over 51000 patients with non dialysis dependent ticket either three to five wasn't analyze longitudinally.
In the first study minibike of those were shown to be independent predict, though adverse renal outcomes as well as high a health care costs.
In fact, each one minute could increase and Sam bicarbonate want associated with 13% decrease in the two year composite endpoint of debt Dawson kidney transplant for grid equaled, 40% you do you have all decline and a 7% decrease and monthly health care costs.
The second study.
With that medical I got the doses is associated with an increased with major at those kind of those called come.
With each one medical and increasing Sim bicarbonate associated with a 2.4% decrease in new onset heart failure at 2.1% degrees in stroke, and a 3.6% decrease and myocardial infarction.
And in the third study metabolic I was a dozen was shown to be an independent predictor of Atlas bone in my book.
Each 1 million call an increase in Tim bicarbonate was associated with a 5% decrease and bone fractures and fall, but at a 12% decrease instead of five full a two year period.
One of the striking an important as all of these free to think analyses is that there's a linear relationship all adds of outcomes across a range of soon by Khalid levels from 12 to 29 mother Constellium.
Any jensen.
And cover the benefit from each one medical and increases in by common across the entire them by common range.
Although disease awareness on the tangling presented as recent work describing longitudinal all these using a database of over 35 million de identified patients.
And these analyses diagnosis and treatment rates comment about the doses with.
And of course over 86000 patients, but I'm a clinical laboratory evidence of stage three to five chronic kidney disease and metabolic on those.
Surprisingly a diagnostic codes have minimal I got notice was president and only 21% all this population.
Do you have all frequency of Waqar therapy use in the large core to patients with 11 to work on for metabolic doses was only 15%.
Dr. Penguins work underscores the significant I'm, a diagnosis and I'm the treatment of metabolic acidosis.
The presentations of new data at the reason there then meeting are the foundation for as I told them or commercial launch.
They show the true impact something I've only got the doses on a wide range of adverse kinda talk.
We also now after their disease modifying data published until after the in June and the reason bike uptime is all that show commonly use doses of also in Bicol appeared to be not efficacious and not cost effective.
And we have identified on the treatment of medical I got the doses to be to keep area telecom for commercial launch.
Given all these factors, we believe we can mobilize and if orders to adopt and urgency to treat attitude for patients with CKD and metabolic after those.
You know a commercial launch the targeting a concentrated market a 5000 apologists that'd be believe treat the vast majority of the 600000 patients with CKD and to me.
Based on market surveys the holiday product catalogs and pay a input on potential coverage decision. We believe the TPP market penetration of approximately 50000 of these 600000 patients bizarre thing and U.S. peak revenue up over $2 billion per year.
They truly excited about the very much opportunity.
With that I'll turn the call about Jeff.
Thank you Gary and thank you all for joining the call today I will now provide a brief overview of our financials additional detail on our third quarter financial results can be found in our press release issued earlier today.
And in our 10-Q, which will be filed with the FCC.
We're pleased to report that we remain in a strong financial position.
As of September Thirtyth, 2019 price, either had cash cash equivalents and investments of $363.6 million.
The third quarter, our research and development expenses were $32 million.
General and administrative expense was $13.1 million.
Our net loss for the third quarter was $44.1 million were 89 cents per share, including noncash stock based compensation expense.
$8.7 million.
As we look forward to the completion of 2019, our quarterly research and development expense will likely be in the range of $35 million to $40 million in the fourth quarter, given the timing of a bit armor drug substance production and an increase in our clinical trial expenses related to valor CKD.
General and administrative expenses likely to increase to be in the range of $20 million to $25 million during the fourth quarter given the steady increase in expenses related to our commercial preparations for the anticipated launch of a bit armor.
These combined R&D and June a fourth quarter expenses include an estimated $12 million to $14 million in noncash stock based compensation.
From a cash burn perspective, we reiterate our guidance that our use of cash in 2019 will be between 135 and $145 million.
We projected our cash on hand, together with our borrowing availability under our Hercules debt facility well be sufficient to fund the anticipated launch of about summer in 2020 and to support our operations well into 2021.
Finally, I'm pleased to report that we hosted our first Investor Day on October 15th in New York City.
If you would like to listen to the event. It is available as a replay on our website.
You bet included a panel of medical experts to discuss the serious consequences of metabolic acidosis, and it's going to CKD progression.
And presentations for our medical affairs team and our commercial team, who discussed Arbor, Ballmer launched dynamics and preparations.
I would now like to turn the call over to the operator for any questions operator.
Certainly ladies and gentlemen, if you have a question at this time. Please press Star then one on you've touched on telephone. If your question has been answered and you'd like to move yourself from the Q. Please press the pound key our first question comes from the line up build to do from Cowen and company. Your question. Please.
[noise]. Good afternoon. Thanks for taking my question and congrats on the progress first question is on your announcement of the FDA Advisory Committee appreciating that the reviews in the early days do you have to provide any reason for wanting it in outcome for the filing.
So no I mean, they did not and I think typically what what they do as they communicate the specific topics shortly before.
Potential Advisory Committee meeting.
Do you have any theories as to why they.
Well one.
Yeah, I've learned over the years not to speculate you know and I think we you know we honestly you know very excited to actually you know present, our data I think both you know from from you know the perspective of standard review and the outcome. When you when you look at our program.
Yeah, we had amongst the first you know to really utilize the accelerated approval path where their renal indication.
And and you know when we had our pre aigner meeting I think we we shed you know all the data with them that we had available.
Including the data beyond the circuit, so forget I'm not speculating about about any any potential topics for the outcome, but but you know this exciting I mean I think.
And not many people have have pursued a major disease modifying renal indication now under subpart H.
Right great. Okay that is helpful and second question I apologize when you do you mentioned the Fisher physical function analyses.
That were new I only get the very basic so the second one to 4.3 seconds could you review that again, but what what was that funding.
I think there's always the quest to.
To to translate the finding in that test right the 4.32nd improvement from baseline.
Into something that that's basically the you know the treating physician can understand.
And what what talked about it has is a model that expresses these physical functioning results and are in terms of aging.
And when you when he many basically the post Doc analysis with our when your data he found that that effectively the improvement seen that with Verma equates to about a 20 year production and physical function age.
Got it okay that is very clear. Thank you. So the question is [noise].
On the completion of enrollment for the the confirmatory study now being in mid 20.
Let's start with somewhat later than we had been anticipating it is my memory and correct there and if not if if it is a little daughters.
What is.
What is left to do I would have resulted in a delay.
Yeah, We I think we're very happy I think this is one of the you know the fastest recruiting you know outcome trial.
And I think we obviously had the.
This tied to the India submission originally we were able early on.
You know to really to remove that as a and the provision.
Yeah hurdle for India submission, but you know the trials is going extremely well and I think we.
We are excited to two via the follow up post marketing post approval commitment.
Okay that is somewhat and then just last questions for you just on the the gene a for Q4 should we.
Consider that as the baseline off of which we grow or 2020 estimates or are there any onetime charges in Q4, specifically GSK.
Yeah.
Wont repeat in 2020.
Oh I am.
I do think you should begin to use that as as a baseline.
And we'll be you know we'll plan to.
Talk about 2020 early in 2020, but.
As you begin to adjust your model I think that's a fair.
Fair baseline.
Remember DNA DNA will begin to include yes.
Okay. So it'll be asked you know.
Got it thanks for taking my questions and congrats again on purpose.
Thank you. Our next question comes on line of Jessica Fye from JP Morgan Your question. Please.
Hey, guys. Good afternoon, and thanks for taking my question with the dollar trial expected to complete enrollment in the middle of 2020 can you remind us when we should expect the interim and the full read out I think in the past you were indicating that the interim could come two to three years after full enrollment and the full read out would be three to four years after full enrollment.
That's still accurate or if not can you update those timelines.
Yeah, that's like a <unk> event, driven trial and I think those estimates or.
Okay.
Great. Thank you.
Your next question comes on the line of Alan Carr from Needham Your question. Please.
Alan do you might have your phone on mute.
Hi, Thanks for taking my questions can you talk a bit more about a commercial prep what does that.
Yes plant or how are you going to stage. This over time in terms of side.
Sales and sales force and that's sort of.
Yeah, I don't I think if you've seen a.
No I think our presence at a at and then you know and that that was a an important tent pole of and I think the prominent without perspective, you know we plan on on really ramping this up early in the to really do the disease awareness and and really the Encap spring meeting as I think.
He kick off for some of the field based activities.
Great. Thanks for taking my question.
Thank you.
Your next question comes from the line to Gregg said one of your from Goldman Sachs. Your question. Please.
Yes, hi, good afternoon. Thanks for taking my question and congrats on the progress of I've got two questions. If I may one.
With respect to look cardiovascular and renal products division, maybe from a high level can you give us some perspective on historically speaking of the divisions I don't know openness to innovation or are they a more conservative type of division.
So any any color from your perspective would be helpful. There.
And then my second question.
Does have to do with kind of payback counter Alan's question around commercial readiness do you have been idea of when you might be able to more granular lead detail kind of the commercialization efforts and or spend is that something you plan to provide.
Say that.
A view around 2020 financial guidance or just kind of how do you expect to communicate numbers and strategy around commercialization. Thanks.
That's right.
Yeah, and Catarina I think you know, we've really worked closely with them.
Since the early days the program and I think there.
Very aware of the need for new disease modifying treatments, specifically in the renal portion or how do we know.
And really have been a.
And that's an excellent partner and helping US you know do and pursue this program on a under subpart H and I think that that this you know it's something that.
We've been we've been working on a meeting with them quite frequently.
Yeah.
This year on on some of the physical functioning endpoints you know so it's a really open for innovation and a and engaged and interested I think in enabling new disease modifying treatment.
In CKD.
On the commercial planning I think we we started tower.
[noise] provide some of the details.
More on a strategic level at our Investor day now that have you have the dates I think.
Yes, I think towards the middle of the I think we'll provide more detail on ER.
That's right.
I would add that in addition, our guidance on Salesforce size continues to be originally we had always talked about 80 to 100 reps in the field, we've narrowed that down closer to 85 as the appropriate number a that can effectively detail a the 5000 keen to for.
Colleges, who were in the market who represent the vast majority of ER scripts in the patients. We are seeking so <unk> a classic specialty sales force size and but we will we will anticipate giving more guidance in 2020 on that.
Thank you very much.
Thank you and this does conclude be question and answer session of today's program I'd like to hand, the program back to check Cosmen for any further remarks.
Thank you Jonathan and thank you all for joining us today and on the call. If you have questions. Please don't hesitate to contact us. So you can reach us at Tracy to IR Dot com.
And that we look forward to helping you further thank you and goodbye.
Thank you, ladies and gentlemen for your participation in today's conference. This does conclude the program you may now disconnect good day.