tcda-20220630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2022


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-38558

TRICIDA, INC.

(Exact name of registrant as specified in its charter)

Delaware

46-3372526

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification Number)

7000 Shoreline Court, Suite 201, South San Francisco, CA 94080

(Address of principal executive offices, including zip code)

(415) 429-7800

(Registrant’s telephone number, including area code)


Securities registered pursuant to Section 12(b) of the Act
Title of each class	Trading Symbol(s)	Name of exchange on which registered
Common stock, par value $0.001 per share	TCDA	The Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☐

Non-accelerated filer	☒	Smaller reporting company	☒

Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.			☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

On August 4, 2022, the registrant had 55,668,880 shares of common stock, par value $0.001 per share, outstanding.

TABLE OF CONTENTS


Note Regarding Forward-Looking Statements		1
Part I. Financial Information
Item 1.	Financial Statements (Unaudited):	3
	Condensed Balance Sheets as of June 30, 2022 and December 31, 2021	3
	Condensed Statements of Operations and Comprehensive Loss for the three and six months ended June 30, 2022 and 2021	4
	Condensed Statements of Stockholders’ Equity (Deficit) for the three and six months ended June 30, 2022 and 2021	5
	Condensed Statements of Cash Flows for the six months ended June 30, 2022 and 2021	6
	Notes to Condensed Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	23
Item 4.	Controls and Procedures	23
Part II. Other Information
Item 1.	Legal Proceedings	25
Item 1A.	Risk Factors	25
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	28
Item 3.	Defaults Upon Senior Securities	28
Item 4.	Mine Safety Disclosures	28
Item 5.	Other Information	28
Item 6.	Exhibits	29
	Signatures	30

NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements concerning our business, operations and financial performance and condition, as well as our plans, objectives and expectations for our business operations and financial performance and condition. Any statements contained herein that are not statements of historical facts may be deemed to be forward-looking statements. Forward-looking statements generally can be identified by words such as “aim,” “anticipate,” “assume,” “believe,” “contemplate,” “continue,” “could,” “due,” “estimate,” “expect,” “goal,” “intend,” “may,” “objective,” “plan,” “predict,” “potential,” “seek,” “should,” “target,” “will,” “would” and other similar expressions that are predictions of or indicate future events and future trends, or the negative of these terms or other comparable terminology. These forward-looking statements include, but are not limited to, statements about:

•estimates of our expenses, capital requirements and our needs for additional financing;

•the prospects of veverimer (also known as TRC101), our only investigational drug candidate, which is still in development;

•our ability to obtain approval of our New Drug Application, or NDA, for veverimer from the U.S. Food and Drug Administration, or FDA, under either traditional approval or the Accelerated Approval Program, if at all;

•our ability to resolve the deficiencies identified by the FDA in the Complete Response Letter and issues raised in the Appeal Denied Letter related to our NDA for veverimer;

•the design of our renal outcomes clinical trial, VALOR-CKD (also known as TRCA-303);

•our expectations regarding endpoint accrual, the geographic distribution of endpoint events, outcome and reporting of results of our VALOR-CKD trial;

•the outcome and results of our VALOR-CKD trial;

•the market acceptance or commercial success of veverimer, if approved, and the degree of acceptance among physicians, patients, patient advocacy groups, health care payers and the medical community;

•our expectations regarding competition, potential market size and the size of the patient population for veverimer, if approved for commercial use;

•our expectations regarding the safety, efficacy and clinical benefit of veverimer;

•our ability to achieve and maintain regulatory approval of veverimer, and any related requirements, restrictions, limitations and/or warnings in the label of veverimer;

•our sales, marketing or distribution capabilities and our ability to commercialize veverimer, if we obtain regulatory approval;

•our current and future agreements with third parties in connection with the manufacturing, commercialization, packaging and distribution of veverimer;

•our expectations regarding the ability of our contract manufacturing partners to produce veverimer in the quantities and timeframe that we will require;

•our expectations regarding our future costs of goods;

•our ability to attract, retain and motivate key personnel;

•the scope of protection we are able to establish and maintain for intellectual property rights covering veverimer;

•potential claims relating to our intellectual property and third-party intellectual property;

•the duration of our intellectual property estate that will provide protection for veverimer;

•our ability to conduct additional financings;

•our ability to establish collaborations in lieu of obtaining additional financing;

•the potential impact of epidemics and pandemics, including COVID-19, local or regional military actions, including the Russian invasion of Ukraine, or natural disasters, on the health care system, financial markets and economy generally and on our business, including on our VALOR-CKD trial, in particular; and

•our financial performance.

These forward-looking statements are based on management’s current expectations, estimates, forecasts, and projections about our business and the industry in which we operate and management’s beliefs and assumptions and are not guarantees of future performance or development and involve known and unknown risks, uncertainties, and other factors that are in some cases beyond our control. As a result, any or all of our forward-looking statements in this Quarterly Report on Form 10-Q may turn out to be inaccurate. Factors that may cause actual results to differ materially from current expectations include, among other things, those listed under, or referenced in, Part II, Item 1A. “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q. Investors in our securities are urged to consider these factors carefully in evaluating the forward-looking statements. These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q. Except as required by law, we assume no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future. Investors in our securities should, however, review the factors and risks we describe in the reports we will file from time to time with the Securities and Exchange Commission after the date of this Quarterly Report on Form 10-Q.

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

TRICIDA, INC.

CONDENSED BALANCE SHEETS

(Unaudited)

(in thousands, except share and per share amounts)


	June 30, 2022		December 31, 2021
Assets
Current assets:
Cash and cash equivalents	$	22,152	$	21,113
Short-term investments	76,543		119,419
Prepaid expenses and other current assets	3,685		5,004
Total current assets	102,380		145,536
Long-term investments	—		10,043
Property and equipment, net	611		769
Operating lease right-of-use assets	11,297		12,158

Total assets	$	114,288	$	168,506

Liabilities and stockholders’ equity (deficit)
Current liabilities:
Accounts payable	$	3,740	$	10,023
Current operating lease liabilities	2,777		2,736

Accrued expenses and other current liabilities	13,530		16,721
Total current liabilities	20,047		29,480


Convertible Senior Notes, net	195,119		127,512
Non-current operating lease liabilities	10,346		11,296

Total liabilities	225,512		168,288
Commitments and contingencies (Note 5)
Stockholders’ equity (deficit):
Preferred stock, $0.001 par value; 40,000,000 shares authorized, no shares issued or outstanding as of June 30, 2022 and December 31, 2021.	—		—
Common stock, $0.001 par value; 400,000,000 shares authorized as of June 30, 2022 and December 31, 2021; 55,661,343 and 55,363,461 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively.	56		55
Additional paid-in capital	745,394		810,618
Accumulated other comprehensive income (loss)	(475)		(91)
Accumulated deficit	(856,199)		(810,364)
Total stockholders’ equity (deficit)	(111,224)		218
Total liabilities and stockholders’ equity (deficit)	$	114,288	$	168,506

See accompanying notes to condensed financial statements (unaudited).

TRICIDA, INC.

CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited)

(in thousands, except share and per share amounts)


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Operating expenses:
Research and development	$	16,859	$	19,781	$	35,363	$	51,956
General and administrative	9,824		9,550		18,994		19,445
Total operating expenses	26,683		29,331		54,357		71,401
Loss from operations	(26,683)		(29,331)		(54,357)		(71,401)

Other income (expense), net	123		(296)		131		149
Interest expense	(1,976)		(3,926)		(3,949)		(9,539)
Loss on early extinguishment of Term Loan	—		—		—		(6,124)


Net loss	(28,536)		(33,553)		(58,175)		(86,915)
Other comprehensive income (loss):
Net unrealized gain (loss) on available-for-sale investments, net of tax	(98)		(21)		(384)		(126)
Total comprehensive loss	$	(28,634)	$	(33,574)	$	(58,559)	$	(87,041)
Net loss per share, basic and diluted	$	(0.49)	$	(0.67)	$	(1.01)	$	(1.73)
Weighted-average number of shares outstanding, basic and diluted	57,825,636		50,294,787		57,772,602		50,271,373

See accompanying notes to condensed financial statements (unaudited).

TRICIDA, INC.

CONDENSED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

(Unaudited)

(in thousands, except share amounts)



	Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Total Stockholders’ Equity (Deficit)
	Shares	Amount
Balance at December 31, 2021	55,363,461	$	55	$	810,618	$	(91)	$	(810,364)	$	218
Cumulative effect of ASU 2020-06 adoption	—	—		(79,498)		—		12,340		(67,158)
Issuance of common stock under equity incentive plans	33,697	—		41		—		—		41
Stock-based compensation	—	—		6,524		—		—		6,524
Net unrealized gain (loss) on available-for-sale investments, net of tax	—	—		—		(286)		—		(286)
Net loss	—	—		—		—		(29,639)		(29,639)
Balance at March 31, 2022	55,397,158	55		737,685		(377)		(827,663)		(90,300)
Issuance of common stock under equity incentive plans	264,185	1		638		—		—		639
Stock-based compensation	—	—		7,071		—		—		7,071
Net unrealized gain (loss) on available-for-sale investments, net of tax	—	—		—		(98)		—		(98)
Net loss	—	—		—		—		(28,536)		(28,536)
Balance at June 30, 2022	55,661,343	$	56	$	745,394	$	(475)	$	(856,199)	$	(111,224)



	Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Total Stockholders’ Equity (Deficit)
	Shares	Amount
Balance at December 31, 2020	50,210,779	$	50	$	742,555	$	64	$	(633,798)	$	108,871
Issuance of common stock under equity incentive plans	61,946	—		115		—		—		115
Stock-based compensation	—	—		6,042		—		—		6,042
Net unrealized gain (loss) on available-for-sale investments, net of tax	—	—		—		(105)		—		(105)
Net loss	—	—		—		—		(53,362)		(53,362)
Balance at March 31, 2021	50,272,725	50		748,712		(41)		(687,160)		61,561
Issuance of common stock under equity incentive plans	156,009	—		333		—		—		333
Stock-based compensation	—	—		6,609		—		—		6,609
Net unrealized gain (loss) on available-for-sale investments, net of tax	—	—		—		(21)		—		(21)
Net loss	—	—		—		—		(33,553)		(33,553)
Balance at June 30, 2021	50,428,734	$	50	$	755,654	$	(62)	$	(720,713)	$	34,929

See accompanying notes to condensed financial statements (unaudited).

TRICIDA, INC.

CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)


	Six Months Ended June 30,
	2022		2021
Operating activities:
Net loss	$	(58,175)	$	(86,915)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	158		253

Non-cash operating lease costs	(49)		496
Amortization of premiums and accretion of discounts on investments, net	(37)		335
Accretion of Term Loan and Convertible Senior Notes	449		4,804
Loss on early extinguishment of Term Loan	—		6,124
Stock-based compensation	13,595		12,651
Changes in compound derivative liability	—		(202)
Other non-cash items	—		(29)
Changes in operating assets and liabilities:
Prepaid expenses and other assets	1,320		(752)
Accounts payable	(6,284)		(769)
Accrued expenses and other liabilities	(2,961)		(9,103)

Net cash used in operating activities	(51,984)		(73,107)
Investing activities:
Purchases of investments	(48,926)		(96,883)
Proceeds from maturities of investments	101,500		137,949

Purchases of property and equipment	—		(76)
Net cash provided by investing activities	52,574		40,990
Financing activities:
Proceeds from equity offerings, net	(33)		—

Proceeds from issuance of common stock under equity incentive plans	680		448
Payments for taxes related to net share settlement of equity awards	(198)		—


Repayment of leasehold improvement loan	—		(38)
Cash paid for early extinguishment of Term Loan	—		(83,285)

Net cash provided by (used in) financing activities	449		(82,875)
Net increase (decrease) in cash and cash equivalents	1,039		(114,992)
Cash and cash equivalents at beginning of period	21,113		137,857
Cash and cash equivalents at end of period	$	22,152	$	22,865
Supplemental disclosures
Cash paid for interest	$	3,500	$	5,274

See accompanying notes to condensed financial statements (unaudited).

TRICIDA, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1. ORGANIZATION AND BASIS OF PRESENTATION

Organization—Tricida, Inc., or the Company, was incorporated in the state of Delaware on May 22, 2013. The Company is focused on the development and commercialization of its investigational drug candidate, veverimer (also known as TRC101), a non-absorbed, orally-administered polymer designed to slow chronic kidney disease, or CKD, progression through the treatment of metabolic acidosis in patients with metabolic acidosis and CKD.

Funding Requirements—The Company has sustained operating losses and expects such annual losses to continue over the next several years. The Company’s ultimate success depends on the outcome of its research and development and commercialization activities for veverimer, for which it expects to incur additional losses in the future. Through June 30, 2022, the Company has relied primarily on the proceeds from equity offerings and debt financing to finance its operations.

The Company has incurred losses and negative cash flows from operations since its inception in 2013 and management anticipates that the Company will continue to incur net losses for the foreseeable future. As of June 30, 2022, the Company had an accumulated deficit of $856.2 million. Existing cash, cash equivalents and investments are not likely to be sufficient to fund the Company's operations through the second quarter of 2023 as management expects to incur additional losses in the future to conduct research and development and pre-commercialization activities. Management recognizes that the Company will need to raise additional capital to fully implement its business plan. The Company plans to evaluate obtaining additional capital prior to the end of 2022. In addition, the Company has Common Warrants outstanding that are eligible for exercise at the discretion of the holders. See a full description of the Common Warrants in Note 6. "Stockholders' Equity".

If financing is not available at adequate levels, on reasonable terms or within a reasonable time frame, the Company will need to reevaluate its operating plans and could be required to significantly reduce operating expenses and delay, reduce the scope of, or eliminate some of its development programs or its future commercialization efforts, out-license intellectual property rights to its investigational drug candidates and sell unsecured assets, or a combination of the above, any of which may have a material adverse effect on its business, results of operations, financial condition and/or its ability to fund its scheduled obligations on a timely basis or at all. These conditions raise substantial doubt about the Company’s ability to continue as a going concern for a period of one year from the date of the issuance of these condensed financial statements.

The accompanying unaudited condensed financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. The unaudited condensed financial statements do not reflect any adjustments relating to the recoverability and reclassifications of assets and liabilities that might be necessary if the Company is unable to continue as a going concern.

Basis of Presentation—The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States, or U.S. GAAP, for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. The condensed financial statements as of and for the three and six months ended June 30, 2022 and 2021 are unaudited, but include all adjustments, consisting only of normal recurring adjustments, which the Company considers necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented. The condensed balance sheet as of December 31, 2021, has been derived from audited financial statements. Results for any interim period are not necessarily indicative of results for any future interim period or for the entire year.

Certain information and footnote information normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission. The accompanying condensed financial statements should be read in conjunction with the financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2021.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

There have been no material changes to the significant accounting policies discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, other than the adoption of ASU No. 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40), or ASU 2020-06, as described below.

Recent Accounting Pronouncements

Adopted Standards

In August 2020, the FASB issued ASU 2020-06. ASU 2020-06 simplifies the accounting for convertible debt instruments and convertible preferred stock by removing the existing guidance in Accounting Standards Codification, or ASC, 470-20, Debt – Debt with Conversion and Other Options, or ASC 470-20, that requires entities to account for beneficial conversion features and cash conversion features in equity, separately from the host convertible debt or preferred stock. In addition, the amendments revise the scope exception from derivative accounting in ASC 815-40, Derivatives and Hedging – Contracts in Entity’s Own Equity, for freestanding financial instruments and embedded features that are both indexed to the issuer’s own stock and classified in stockholders’ equity, by removing certain criteria required for equity classification. These amendments are expected to result in more freestanding financial instruments qualifying for equity classification (and, therefore, not accounted for as derivatives), as well as fewer embedded features requiring separate accounting from the host contract.

The Company adopted ASU 2020-06 effective January 1, 2022, using the modified retrospective method. On adoption, the Company accounted for the Convertible Senior Notes as a single liability measured at amortized cost resulting in reduced prospective non-cash interest expense due to the de-recognition of the remaining debt discount associated with the equity component. The cumulative impact of the adoption of ASU 2020-06 reflected on the Company's condensed balance sheet as of January 1, 2022, is as follows.


in thousands	Balance at December 31, 2021		Cumulative Impact of ASU 2020-06 Adoption		Balance at January 1, 2022
Liabilities
Convertible Senior Notes, net	$	127,512	$	67,158	$	194,670
Stockholder's Equity
Additional paid-in capital	810,618		(79,498)

SEC Form 10-Q filed by Tricida Inc.