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Edited Transcript of TCDA.OQ earnings conference call or presentation 8-Aug-19 8:30pm GMT

Q2 2019 Tricida Inc Earnings Call

SOUTH SAN FRANCISCO Aug 16, 2019 (Thomson StreetEvents) -- Edited Transcript of Tricida Inc earnings conference call or presentation Thursday, August 8, 2019 at 8:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Geoffrey M. Parker

Tricida, Inc. - CFO & Senior VP

* Gerrit Klaerner

Tricida, Inc. - Founder, President, CEO & Executive Director

* Jackie Cossmon

Tricida, Inc. - VP of IR & Communications

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Conference Call Participants

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* Graig Suvannavejh

Goldman Sachs Group Inc., Research Division - Executive Director & Senior Equity Research Analyst

* Jessica Macomber Fye

JP Morgan Chase & Co, Research Division - Analyst

* Joseph Robert Stringer

Needham & Company, LLC, Research Division - Associate

* Laura Christianson

Cowen and Company, LLC, Research Division - Research Associate

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Presentation

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Operator [1]

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Good afternoon, ladies and gentlemen, and welcome to the Tricida second quarter financial results conference call. (Operator Instructions) As a reminder, this conference call is being recorded.

I would now like to turn the conference over to your host, Ms. Jackie Cossmon. Jackie, please go ahead.

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Jackie Cossmon, Tricida, Inc. - VP of IR & Communications [2]

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Thank you, Jonah. Good afternoon, and thank you for joining the Tricida second quarter financial results conference call. In today's call, Gerrit Klaerner, our CEO, President and Founder, will discuss our business progress; and Geoff Parker, our CFO, will then discuss our financial results for the second quarter.

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 statements regarding our future development and commercialization plans, the conduct of our confirmatory post-marketing trial, recruitment milestones, planned NDA submission and approval, financial guidance and other statements that are not historical facts.

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 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. For a copy of our press release that was issued prior to this call, please go to www.tricida.com and follow the link to our Investor Relations page.

At this time, I'd like to turn the call over to Gerrit.

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Gerrit Klaerner, Tricida, Inc. - Founder, President, CEO & Executive Director [3]

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Thank you, Jackie. Good afternoon, and welcome to our second quarter call. It's been an eventful quarter where we have made great progress on a number of fronts.

First, we are updating and narrowing the timing for our planned NDA submission under the Accelerated Approval Program from the second half to the third quarter of 2019 based on our recent positive pre-NDA meeting with the FDA, which included a thorough discussion of our TRCA-301E trial results.

Separately, we discussed with the FDA the significant progress that we've made in the enrollment of our confirmatory post-marketing trial VALOR-CKD. While this trial is not yet fully enrolled, the overall enrollment progress was deemed sufficient by the FDA for Tricida to plan for the NDA submission in the third quarter of 2019. We intend to provide an update by the end of the year on our estimates for randomizing the last patient in our VALOR-CKD trial.

As you know, we are pursuing initial approval under the Accelerated Approval Program on the basis of the surrogate endpoint of serum bicarbonate increase with an ongoing post-marketing commitment to demonstrate that our surrogate endpoint translates to clinical benefit. The pillars of our clinical program are the double-blind, placebo-controlled, multi-center 12-week Phase III and blinded placebo-controlled 40-week extension trials that have now been presented in back-to-back publications in The Lancet. The 301E manuscript was accepted for Fast Track publication based on The Lancet's commitment to get important data into the public health arena as quickly as possible. From submission to publication, including full peer review, manuscript editing and publication, the 301E results were published in 4.5 weeks. We believe this speaks to the importance of this data.

In Figure 2 of the paper, a Kaplan-Meier product data from the prespecified analysis of time to composite endpoint of death/dialysis or a confirmed 50% decline in eGFR is presented for the first time. It shows that more patients on veverimer survived for a longer time without a DD50 event than compared to placebo, with the survival part showing separation in favor of veverimer starting after 10 weeks.

Figure 4 of The Lancet shows that veverimer-treated patients had sustained improvement in self-reported physical functions starting at week 12 that continued to weeks 40 and 52. The mean improvement in the veverimer group was an 11-point improvement in multiple activities, including the ability to walk multiple blocks and climb a flight of stairs, exceeding the minimum clinically important difference of a 3- to 5-point improvement.

Figure 4B shows that the objectively measured physical function as set by the repeated chair stand test also improved on veverimer starting at week 12, and continued improvement was seen at weeks 40 and 52. At week 52, the veverimer-treated group experienced a 4.3-second improvement in their ability to stand up from a chair 5 times, exceeding the minimal clinically important difference of 1.7 seconds.

I've presented here some highlights of the data included in the most recent Lancet publication. Details on these results and other data can be found in the publication.

All 3 of our blinded, placebo-controlled, multi-center clinical trials have now been published in very well-respected, high-impact journals. These publications have allowed us to share the exciting findings beyond the surrogate effect of serum bicarbonate increase with this potential first and only treatment of metabolic acidosis that uses the novel mechanism of action of acid binding and removal. The results showing improved physical function longer time to composite DD50 clinical endpoint are consistent with the basic pathophysiology of metabolic acidosis and, we believe, add to the overall body of evidence of the link between treating metabolic acidosis and improving muscle, bone and kidney health.

Next, we would like to call your attention to some recent data generated by a group associated with the University of Dundee in England. The bicarb study is the first multi-center, randomized, double-blind, placebo-controlled study of oral sodium bicarbonate. Results from this trial of 300 patients with CKD and mild metabolic acidosis have been made available on the European Clinical Trials Register website. The protocol for the study, which is available online, was published by Dr. Miles Witham and colleagues in trials in 2015. The study randomized 152 patients to 1.5 to 3 grams of oral sodium bicarbonate and 148 patients to matching placebo.

The primary endpoint for the trial was the between group difference and the change in the Short Physical Performance Battery or SPPB score after 1 year of treatment. The SPPB is a composite measure of physical function composed of 5 times repeated chair stand test, a gait speed test and a balance assessment. Each of those 3 components contributes from 0 to 4 points to the patient's SPPB score, with the highest score indicating better lower extremity function and the maximum score being 12. The subjects were enrolled at 27 study centers in the U.K. At baseline, the average age of the study population was 74 years, the mean eGFR was 18 to 20 milliliters per minute, and the mean serum bicarbonate was 20 to 21 milligrams per liter. Baseline scores on the SPPB averaged approximately 8 in both groups. Approximately half the study participants in each group withdrew early from the study. The most common reasons for early discontinuation were withdrawal of consent by the subject and adverse events.

After 12 months of treatment, the SPPB score increased 0.3 points in the placebo -- in the bicarbonate group and 0.7 points in the placebo group with a p-value of 0.15, indicating no difference between treatments. Changes from baseline and scores on the quality of life, too, also were not different between groups at the prespecified 2-year time point. The comparison of serum bicarbonate levels after 2 years showed a very small but significant difference. Mean serum bicarbonate was 22.9 milliequivalents per liter in the sodium bicarbonate arm and 22.5 milliequivalents per liter in the placebo arm. No significant difference was observed in eGFR. These results are in sharp contrast to what we saw with veverimer and our own blinded, placebo-controlled, multi-center trial.

With that in mind, let me turn now to our commercial readiness. Given our plans to submit the NDA in the third quarter of this year, we're anticipating approval of veverimer next year, which takes us to a discussion of our prelaunch activities. We've been in high gear, building our commercial and medical affairs teams, advancing our disease awareness campaign, continuing our peer discussions and planning for major presence at the American Society of Nephrology Kidney Week meeting to be held in Washington, D.C. in early November. At the Kidney Week meeting, we plan to present the 301E data and some very intriguing data from a major medical health record database and the true prevalence of metabolic acidosis versus its actual real-world diagnosis and treatment rates. Our disease awareness effort at the meeting will highlight the importance of recognizing, diagnosing and treating metabolic acidosis. They would also seek to raise the awareness of the serious consequences of the disease if left untreated, including bone loss, muscle wasting, early mortality and accelerated progression of CKD.

Our planned NDA submission for veverimer this quarter will be a major achievement, and I am proud of the Tricida team for taking the program from investigational New Drug Application to a planned NDA submission in less than 4 years. The submission of the NDA this quarter has been an aggressive internal goal, and I want to conclude my remarks by giving a shout-out to the team that is currently working around the clock to finalize the new drug application for veverimer.

Now I'd like to turn the call over to Geoff to discuss our financial results for the quarter.

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Geoffrey M. Parker, Tricida, Inc. - CFO & Senior VP [4]

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Thank you, Gerrit, and thank you all for joining us today. I will now provide a brief overview of our financials. Additional detail on our second quarter financial results can be found in our press release issued earlier today and in our 10-Q, which will be filed with the SEC. We are pleased to report that we remain in a strong financial position.

As of June 30, 2019, Tricida had cash, cash equivalents and investments totaling $405.3 million. In the second quarter, our research and development expenses were $29 million. General and administrative expenses were $8.9 million for the second quarter of 2019. Our net loss for the second quarter of 2019 was $36.6 million or $0.75 per share, including noncash stock-based compensation expense of $4.4 million.

As we look forward to the completion of 2019, our research and development expense is projected to increase to between $30 million and $40 million in each of the third and fourth quarters given the timing of veverimer drug substance production and an increase in our clinical trial expenses related to VALOR-CKD.

General and administrative expense is projected to increase to between $13 million and $15 million in each of the third and fourth quarters given the steady increase in expenses related to our commercial preparations for the anticipated launch of veverimer.

From a cash burn perspective, we reiterate our guidance that our use of cash in 2019 will be between $135 million and $145 million. We project that our cash on hand, together with our borrowing availability under our Hercules debt facility, will be sufficient to fund the anticipated launch of veverimer in 2020 and to support our operations well into 2021.

Finally, I am pleased to announce that we will host our first Investor Day scheduled for October 15 in New York. The agenda will include a panel of medical experts, who will discuss the serious consequences of metabolic acidosis and its link to CKD progression and will include presentations from our medical affairs and our commercial team discussing our launch preparations. We look forward to seeing you there.

I would now like to turn the call over to the operator for any questions. Operator?

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Questions and Answers

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Operator [1]

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(Operator Instructions) Your first question comes from the line of Jessica Fye from JPMorgan.

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Jessica Macomber Fye, JP Morgan Chase & Co, Research Division - Analyst [2]

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Great. Thanks for the update on the filing time line. Maybe building on that, I think you previously suggested the potential to file for approval in Europe maybe 12 to 15 months after U.S. filing. With the U.S. filing going in, in the third quarter, should we still think about a roughly 12- to 15-month lag for an EMA submission?

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Gerrit Klaerner, Tricida, Inc. - Founder, President, CEO & Executive Director [3]

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Thanks, Jessica. I think we're going to go and talk to EMA next year, and I think our European time line has not changed on the -- based on the Q3 NDA submission.

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Jessica Macomber Fye, JP Morgan Chase & Co, Research Division - Analyst [4]

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Okay. Great. And then on the VALOR-CKD trial, are you seeing higher-than-expected screen outs? I'm just trying to think about the relatively high prevalence of metabolic acidosis and understanding why it looks like enrollment might end up completing a little later than we had anticipated?

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Gerrit Klaerner, Tricida, Inc. - Founder, President, CEO & Executive Director [5]

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No. I think we've got 80% of the sites open that we're anticipating to open in this study, a total of, I think, 350 sites. We've got approval in all 33 countries, and we are seeing screen failure rates that are comparable to our prior trials. So really no higher screen failure rates.

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Jessica Macomber Fye, JP Morgan Chase & Co, Research Division - Analyst [6]

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Okay. Great. And lastly, can you just remind us when you project that you might be able to conduct the interim analysis in VALOR-CKD?

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Gerrit Klaerner, Tricida, Inc. - Founder, President, CEO & Executive Director [7]

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I think that's basically -- the earliest time point is approximately 2 to 3 years after full enrollment that we'll talk about later this year. And that's, of course, dependent on the event rate at the time-to-event trial. And in order to do the interim, we need to accrue approximately 50% of the primary outcome events.

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Operator [8]

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Your next question comes from the line of Alan Carr from Needham.

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Joseph Robert Stringer, Needham & Company, LLC, Research Division - Associate [9]

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This is Joey on for Alan. I don't know if I missed this earlier, but I was wondering if you could provide a little bit more color on, in terms of VALOR-CKD, just what your expectations are. Have they changed at all in terms of the interim analysis? And you have the 3 possible scenarios, has your expectations changed at all in the last several months? And I have a follow-up to that.

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Gerrit Klaerner, Tricida, Inc. - Founder, President, CEO & Executive Director [10]

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Yes. I think the main news is our NDA submission this quarter. And as you know, we had a requirement before with FDA in terms of enrollment. And I think the ability to really decouple the specific enrollment requirement from the NDA submission, that's really the only change. And that's why I think very major because again, I think a post-marketing study has -- post-marketing study, and we expect it ultimately to take 3 or 4 years to fully read out. And we have no changes in our assumptions around the interim.

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Joseph Robert Stringer, Needham & Company, LLC, Research Division - Associate [11]

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Okay. Great. That's helpful. And then, on the sort of that commercial ramp front, maybe you can provide an update on preparation in terms of talking to payers and what those discussions have been like, that would be helpful.

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Gerrit Klaerner, Tricida, Inc. - Founder, President, CEO & Executive Director [12]

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I think we have a great team on commercial now led by Susannah Cantrell and some medical affairs with Marcel van Kuijck. And so really both areas that are important to our prelaunch and ultimately launch activities now have leadership and are building out the teams. And we are engaged with payers, we are engaged with thought leaders, we are engaged with prescribing nephrologists in terms of really what we believe as the important thing is to raise disease awareness and to really make it very clear that currently, this is underdiagnosed and undertreated, so overall underrecognized disease. And that's really the main theme.

Of course, the first double-blind, placebo-controlled study for the unapproved supplement of oral sodium bicarb is really critical, and that's why we included this very recent data as well. So I think we feel very good about our prelaunch activities.

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Operator [13]

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Your next question comes from the line of Laura Christianson from Cowen.

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Laura Christianson, Cowen and Company, LLC, Research Division - Research Associate [14]

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Good to hear that the conversations went well with the FDA. Just to further clarify, did they say that the Q3 NDA submission is contingent on a set enrollment goal that you still need to achieve? Or is that a pretty final decision that Q3 would be feasible?

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Gerrit Klaerner, Tricida, Inc. - Founder, President, CEO & Executive Director [15]

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Yes. We are very, very confident in terms of Q3 and that our progress is sufficient to submit the NDA in this quarter. So we -- I think that's all we're prepared to say.

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Laura Christianson, Cowen and Company, LLC, Research Division - Research Associate [16]

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Okay. And then, I think one of the other gating things was completing stability -- just having stability data available for the NDA filing. And that was planned for mid-2019. I don't anticipate there being any issues there, but just wanted a quick update, if you guys have one, about whether that's on track as well.

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Gerrit Klaerner, Tricida, Inc. - Founder, President, CEO & Executive Director [17]

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So we have -- I think we have received the stability data. And I think we -- I think it's not going to be, in any way, shape or form, a gating item for the NDA submission.

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Laura Christianson, Cowen and Company, LLC, Research Division - Research Associate [18]

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Okay. Great. And then, I guess, yes, just lastly, part of the publication in The Lancet was that commentary from the 2 practicing nephrologists on the need for studies comparing veverimer to sodium bicarb. And I know you've spoken previously about how that's just really not feasible given that sodium bicarb isn't even approved in the indication and has the sodium load associated with it. But what feedback have you been getting since that commentary was published? And how prevalent do you think that view is among nephrologists?

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Gerrit Klaerner, Tricida, Inc. - Founder, President, CEO & Executive Director [19]

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Yes. I wish they had the -- that British data available that sort of shows placebo-controlled multi-center data on all sodium bicarb. They obviously -- that drug just became available. And so I think that we feel -- especially in the light of that data, we feel very good about choosing placebo. And we have really not heard from sort of the community nephrologists a lot of desire to do so.

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Operator [20]

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Your next question comes from the line of Graig Suvannavejh from Goldman Sachs.

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Graig Suvannavejh, Goldman Sachs Group Inc., Research Division - Executive Director & Senior Equity Research Analyst [21]

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Great. Congrats on the progress in the quarter. I have 2 questions, if I could. One just is an observation that around industry, it seems that more and more FDA is coming down much harder on companies with pending NDAs or BLAs with respect to manufacturing. So I guess the crux of the question is, can you kind of remind us how you feel about the status of your manufacturing and pre-approval inspections in that perspective? And then I've got a follow-up.

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Gerrit Klaerner, Tricida, Inc. - Founder, President, CEO & Executive Director [22]

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Thanks, Graig. Yes, I think manufacturing especially for a high-volume, insoluble, non-absorbed polymer is the top of our mind. We are working with Patheon with I think our head of manufacturing, Willi Stahl, I've worked with across 3 companies. So really a deep expertise in polymer manufacturing. And I think we are producing at commercial scale, and we'll update towards the end of the year in terms of validation progress and any other information in regards to commercial manufacturing.

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Graig Suvannavejh, Goldman Sachs Group Inc., Research Division - Executive Director & Senior Equity Research Analyst [23]

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Great. And then my second question has to do with your activities that you are anticipating at ASN later this year in D.C. And I guess the question is, what are your specific goals or objectives this year at ASN? Are they different in any way than what your goals might have been last year? And is it really more about building awareness of the company or the product? Or -- maybe there are some rules and sensitivities about how much you can talk about the product, since it's still an investigational agent. But again, just can you give us a sense of how you're looking at ASN this year relative to last year?

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Gerrit Klaerner, Tricida, Inc. - Founder, President, CEO & Executive Director [24]

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Yes, it's a very good question. Thank you, Graig. Look, we -- obviously, we have the luxury without a competitor to really benefit the overall community and the understanding of the disease. And that's -- we're going to sort of have a bigger presence. We're going to talk again about the link of metabolic acidosis and CKD progression. We're going to add in the physical function measures and the quality of life in CKD in general. And we are working with experts to really not focus on the company, not focus on the compound but really focus on disease awareness.

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Operator [25]

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I'm showing no further questions at this time. I would now like to turn the conference back to you, Jackie. Jackie?

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Jackie Cossmon, Tricida, Inc. - VP of IR & Communications [26]

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Thank you, Jonah. Thank you all for joining us on today's call. We look forward to reporting our progress at our Investor Day in October and also on our next quarterly call. Don't hesitate to contact us if you have questions. Thank you, and good-bye.

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Operator [27]

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Ladies and gentlemen, this concludes today's conference. Thank you for your participation, and have a wonderful day. You may all disconnect.