Tricida

2019 Annual Report

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549 

FORM 10-K

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

For the fiscal year ended December 31, 2019 
or 

☐ 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
(State or other jurisdiction of incorporation or organization)

46-3372526
(I.R.S. Employer Identification Number)

7000 Shoreline Court, Suite 201
South San Francisco, California 94080
(415) 429-7800
(Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) 

Title of each class

Common stock, par value $0.001 per share

Trading Symbol(s)
TCDA

Name of each exchange on which registered

The Nasdaq Global Select Market

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒  No ☐

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐  No ☒

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, a 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

Smaller reporting company

☒

☐

Accelerated filer

Emerging growth company

☐

☐

Non-accelerated filer

☐

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 ☒

As of June 28, 2019 (the last business day of the registrant's most recently completed second fiscal quarter), the aggregate market value of the 
common stock held by non-affiliates of the registrant was approximately $1.1 billion, based on the closing price of the common stock as reported 
on the Nasdaq Global Select Market on that date. Shares of common stock held by each person who is known to own 10% or more of the 
outstanding common stock have been excluded in that such persons may be deemed to be affiliates of the Company. This determination of 
affiliate status is not necessarily a conclusive determination for other purposes. 

On February 27, 2020, the registrant had 49,855,335 shares of common stock, par value $0.001 per share, outstanding.

Certain portions of the registrant's definitive proxy statement relating to the Company's Annual Meeting of Stockholders, to be filed with the 
Securities and Exchange Commission within 120 days of the registrant's fiscal year ended December 31, 2019, are incorporated by reference 
into Part III of this Annual Report on Form 10-K where indicated.

DOCUMENTS INCORPORATED BY REFERENCE

TABLE OF CONTENTS

Note Regarding Forward-Looking Statements

Item 1.

Business

Item 1A. Risk Factors

Item 1B. Unresolved Staff Comments

Item 2.

Properties

Item 3.

Legal Proceedings

Item 4. Mine Safety Disclosures

PART I

PART II

Item 5.

Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity 
Securities

Item 6.

Selected Financial Data

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Item 8.

Financial Statements

Item 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Item 9A. Controls and Procedures

Item 9B. Other Information

PART III
Item 10. Directors, Executive Officers and Corporate Governance

Item 11. Executive Compensation

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Item 13. Certain Relationships and Related Party Transactions

Item 14. Principal Accountant Fees and Services

PART IV

Item 15. Exhibits and Financial Statement Schedules

Item 16. Form 10-K Summary

Signatures

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NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K 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:

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

the prospects of veverimer (also known as TRC101), our only product 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, through the Accelerated Approval Program;

the market acceptance or commercial success of veverimer, if approved, and the degree of acceptance 
among physicians, patients, patient advocacy groups, third-party payers and the medical community;

our ability to obtain approval and reimbursement for veverimer in markets outside the United States;

the design of our confirmatory postmarketing trial, VALOR-CKD (also known as TRCA-303), including the 
sample size, trial duration, endpoint definition, event rate assumptions and eligibility criteria;

our expectations regarding the timing of the enrollment, completion and reporting of our confirmatory 
postmarketing trial, VALOR-CKD;

the outcome and results of our VALOR-CKD trial;

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

our expectations regarding our ability to draw under our credit facility with Hercules Capital, Inc.;

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

our ability to achieve and maintain regulatory approval of veverimer, and any related 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 and increase the size of our organization;

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;

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our ability to establish collaborations in lieu of obtaining additional financing; 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 Annual Report on Form 10-K 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 Item 1A. 
“Risk Factors” and elsewhere in this Annual Report on Form 10-K. 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 Annual Report on Form 10-K. 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 Annual Report on Form 10-K.

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ITEM 1. BUSINESS

Overview

 PART I

Our goal is to slow the progression of chronic kidney disease, or CKD, through the treatment of metabolic acidosis. 

We are a pharmaceutical company focused on the development and commercialization of our drug candidate, 
veverimer (also known as TRC101), a non-absorbed, orally-administered polymer designed to treat metabolic acidosis 
by binding and removing acid from the gastrointestinal, or GI, tract. Metabolic acidosis is a serious condition commonly 
caused by CKD and is believed to accelerate the progression of kidney deterioration. It can also lead to bone loss, 
muscle wasting and impaired physical function. Metabolic acidosis in patients with CKD is typically a chronic disease 
and, as such, requires long-term treatment to mitigate its deleterious consequences.

There are currently no FDA-approved therapies for treating chronic metabolic acidosis. We estimate that metabolic 

acidosis affects approximately 3 million patients with CKD in the United States, and we believe that treating metabolic 
acidosis and slowing the progression of CKD in patients with metabolic acidosis and CKD represents a significant 
unmet medical need and market opportunity.

Veverimer is an in-house discovered, new chemical entity. We have a broad intellectual property estate that we 
believe will provide patent protection for veverimer until at least 2034 in the United States, the European Union, Japan, 
China, India and certain other markets.

Tricida is led by a seasoned management team that includes the founder of Ilypsa, Inc. and Relypsa, Inc. Our 
management team has extensive experience in the development and commercialization of therapeutics, with deep 
expertise in developing polymers for the treatment of kidney-related diseases.

Metabolic acidosis observed in patients with CKD is most often caused by an imbalance in acid production relative 

to acid excretion. The human body generates acid every day through normal food intake and metabolism. Sources of 
acid include amino acids and nucleic acids from daily dietary intake and digestion of proteins. The daily load of 
nonvolatile acids from metabolic processes amounts to approximately 1 milliequivalent, or mEq, per kilogram, or kg, of 
body weight, or 50 to 100 mEq per day for adults. A healthy kidney excretes this acid daily, but in patients with CKD 
acid excretion is compromised, and as a result, acid accumulates in the body. Over time, a vicious cycle of worsening 
metabolic acidosis and accelerated progression of kidney disease can result.

Acid binding is a novel approach to treating metabolic acidosis without introducing deleterious counterions or 
metals. This approach mimics the physiologic response to acid removal seen with persistent vomiting or nasogastric 
suction that results in an elevated serum bicarbonate level. To achieve the desired effect of increasing serum 
bicarbonate with a convenient daily dose of less than 10 grams per day, an acid binding polymer should have an amine 
capacity to bind at least 5 mEq of proton/gram. Once protonated, the acid binding polymer needs to preserve the effect 
of the proton binding by not removing anions such as fatty and bile acids that represent precursors metabolized to 
bicarbonate in the blood. The complementary anion to be bound that ensures net acid removal from the GI tract is 
chloride, the smallest anion present in the GI tract.

Veverimer is a low-swelling, spherical polymer bead that is approximately 100 micrometers in diameter. It is a 

single, high molecular weight, crosslinked polyamine molecule. The size of veverimer prevents systemic absorption 
from the GI tract. The high degree of cross-linking within veverimer limits swelling and the overall volume in the GI tract, 
with the goal of facilitating good GI tolerability. The high amine content of veverimer provides proton binding capacity of 
approximately 10 mEq/gram of polymer. The size exclusion built into the three-dimensional structure of the polymer 
enables preferential binding of chloride versus larger inorganic and organic anions, including phosphate, citrate, fatty 
acids and bile acids. This size exclusion mechanism allows a majority of the binding capacity to be used for hydrochloric 
acid binding.

Our New Drug Application, or NDA, for veverimer as a chronic treatment for metabolic acidosis in patients with 
CKD, is currently under review by the U.S. Food and Drug Administration, or FDA, through the Accelerated Approval 
Program. The FDA has indicated that it is currently planning to hold a Cardiovascular and Renal Drugs Advisory 
Committee, or CRDAC, meeting to discuss the application. The FDA has assigned a Prescription Drug User Fee Act, or 
PDUFA, goal date of August 22, 2020 for the potential approval to market veverimer in the United States. We are 
currently conducting a confirmatory postmarketing trial, VALOR-CKD (also known as TRCA-303), as part of the 
Accelerated Approval Program.

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Results from our positive Phase 3, 12-week efficacy trial, TRCA-301, and a follow-on 40-week extension trial, 

TRCA-301E, formed the primary clinical basis of our NDA submission. The Lancet published the results of the 
TRCA-301 trial in March 2019 and the results of the TRCA-301E trial in June 2019.

The TRCA-301 trial was a double-blind, placebo-controlled trial that randomized 217 patients with non-dialysis 
dependent CKD and metabolic acidosis. The trial met both its primary and secondary endpoints in a highly statistically 
significant manner (p<0.0001 for both the primary and secondary endpoints). Veverimer was well tolerated in our 
TRCA-301 trial. The primary endpoint of the trial measured improvements in serum bicarbonate levels in veverimer-
treated patients versus placebo. Serum bicarbonate is a surrogate measure of metabolic acidosis and a persistent 
serum bicarbonate level below 22 mEq/L indicates metabolic acidosis. After 12 weeks of treatment, 59.2% of subjects in 
the veverimer-treated group, compared with 22.5% of subjects in the placebo group, had an increase in serum 
bicarbonate level of at least 4 mEq/L or achieved a serum bicarbonate level in the normal range of 22 to 29 mEq/L, 
which was the primary endpoint of the trial. The secondary endpoint of the trial, the least squares, or LS, mean change 
from baseline to week 12 in serum bicarbonate, was 4.42 mEq/L in the veverimer-treated group, compared with 1.78 
mEq/L in the placebo group. The mean change in serum bicarbonate from baseline to week 12 was 4.5 mEq/L in the 
veverimer-treated group, compared with 1.7 mEq/L in the placebo group. 

The TRCA-301E trial was a blinded, 40-week extension of the 12-week TRCA-301 trial. One hundred ninety-six 
subjects, consisting of 114 subjects in the veverimer group and 82 subjects in the placebo group, elected and were 
qualified to continue in the extension trial. The primary endpoint of the TRCA-301E trial was an assessment of the long-
term safety profile of veverimer versus placebo. We observed fewer discontinuations, fewer serious adverse events and 
a comparable rate of GI adverse events on veverimer versus placebo. The trial further demonstrated that the effect of 
veverimer on increasing serum bicarbonate was sustained over one year. The differences between veverimer and 
placebo on the two endpoints related to serum bicarbonate increase were highly statistically significant compared to 
placebo in both the TRCA-301 trial and the TRCA-301E trial.

The statistical analysis plan for the TRCA-301E trial included a pre-specified comparison of the veverimer and 
placebo groups for the time to first occurrence of any event in the composite clinical endpoint of all-cause mortality, 
dialysis/renal replacement therapy or a confirmed ≥50% decline in eGFR, or DD50. Although the trial was not designed 
or powered to assess all-cause mortality or the progression of CKD outcomes, we nevertheless observed a 65% 
reduction in the annualized DD50 event rate for veverimer-treated subjects compared with subjects on placebo. Over 
the combined 52-week treatment period, the annualized DD50 incidence rate was 12.0% in the placebo group versus 
4.2% in the veverimer group (p=0.0224). There were 7 confirmed eGFR reductions ≥50%, 4 deaths and 1 dialysis 
initiation that occurred in 10 of the 82 subjects on placebo versus 5 confirmed eGFR reductions of greater than or equal 
to 50%, 0 deaths and 1 dialysis initiation that occurred in 5 of the 124 subjects on veverimer.

Patients with CKD are often frail and have impaired physical function, and metabolic acidosis is one factor that has 
been implicated as a potential contributor. Metabolic acidosis has direct effects on skeletal muscle catabolism and bone 
demineralization. Two large retrospective cohort analyses found that low serum bicarbonate level was independently 
associated with adverse health outcomes related to physical functioning, such as gait speed, quadriceps strength, 
failure to thrive and fractures/falls (Abramowitz et al., 2011; Reaven et al., 2019). Prospective studies of patients with 
metabolic acidosis and CKD have shown that treatment of metabolic acidosis increased muscle mass (de Brito-Ashurst 
et al., 2009; Dubey et al., 2018) and improved muscle function (Abramowitz et al., 2013), and physical function related 
quality of life (de Brito-Ashurst et al., 2015).

We also assessed physical functioning both subjectively and objectively in our TRCA-301 and TRCA-301E studies. 
The subjective physical function endpoint examined the effect of treatment with veverimer on self-reported responses to 
the physical function subpart of the Kidney Disease and Quality of Life Short Form, or the KDQOL-SF, survey. This 
survey is a validated questionnaire for patients with kidney disease designed to assess health-related quality of life; the 
physical function subpart is based on activities of daily living. Subjects in the trial responded to 10 questions, each with 
a value of 10 points, resulting in a maximum score of 100 total points. After one year of treatment, there was no 
improvement in the placebo group, whose mean score decreased from a baseline score of 56 points to 55 points. 
However, subjects on veverimer had an 11-point improvement, on average, moving from a mean score of 53 points to 
64 points (p<0.0001). The objective physical function endpoint examined the effect of treatment with veverimer on 
results of the Repeated Chair Stand Test. In this test, subjects were asked to stand up and sit down five times as 
quickly as possible, and the time for these five repetitions was recorded. At the end of one year of treatment, the 
average time for performing the Repeated Chair Stand Test decreased by 4.3 seconds on veverimer compared to 1.4 
seconds on placebo compared to a baseline of 22 seconds and 21 seconds, on average, for the veverimer and placebo 
groups, respectively (p<0.0001).

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An interesting concept has emerged in the academic literature that describes CKD as a clinical model of premature 
aging, indicating that patients with CKD often experience many of the complications of aging, but at younger ages than 
the general population. This includes elevated rates of aging-related disorders, including markedly reduced physical 
function compared to adult populations of the same age. This is a major problem because impaired physical function 
leads to significant morbidity, including high rates of falls and fractures, and is also a risk factor for death. Therefore, 
preserving physical function is critical in patients with CKD. Dr. Matthew Abramowitz, Associate Professor of Medicine 
at the Albert Einstein College of Medicine, has conducted a post-hoc analysis of age-related physical function 
improvements that were observed with veverimer in our TRCA-301E long-term extension trial. First, the analysis 
showed that at baseline, 45% of our study population was slower in performing the Repeated Chair Stand Test than the 
average 80- to 89-year old, despite an average age of 62 years. Second, the mean improvement of 4.3 seconds in the 
Repeated Chair Stand Test time observed in veverimer-treated subjects in the TRCA-301E study was greater than the 
difference in mean expected test-time performance between individuals in their 80s and those in their 60s, suggesting 
that the 4.3 second improvement in test time observed in veverimer-treated subjects is equivalent to an approximately 
20-year reduction in aging-related physical functioning. Dr. Abramowitz concluded that interventions that improve 
physical function in patients with CKD have the potential to restore a substantial proportion of age-predicted loss of 
performance.

We believe the data from our TRCA-301 and TRCA-301E trials provide strong evidence that veverimer can 

effectively raise serum bicarbonate levels in patients with metabolic acidosis and CKD, and potentially slow progression 
of CKD as well as provide a clinically meaningful difference in physical function related quality of life and daily physical 
functioning. 

Given the high unmet medical need for an FDA-approved chronic treatment for metabolic acidosis in patients with 
CKD, the broad understanding among nephrologists that treatment of metabolic acidosis can slow CKD progression, the 
favorable response from nephrologists to veverimer’s target product profile, and the potential health and economic 
benefits from treating metabolic acidosis, we believe that there is a significant opportunity for veverimer in the U.S. 
market, if approved, as the first and only FDA-approved therapy for the treatment of metabolic acidosis and slowing of 
kidney disease progression in patients with metabolic acidosis associated with CKD.

Our Strategy

Our strategy is to develop and commercialize veverimer as the first and only FDA-approved therapy for the 

treatment of metabolic acidosis and slowing of kidney disease progression in patients with metabolic acidosis 
associated with CKD for the large population of patients with metabolic acidosis and CKD. Key elements of our strategy 
are to:

• Obtain FDA approval of veverimer. The veverimer NDA is currently under review through the FDA’s Accelerated 

Approval Program. The FDA has assigned a PDUFA goal date of August 22, 2020 for the potential approval to 
market veverimer in the United States. 

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Expand awareness of, and educate nephrologists on, the consequences of untreated metabolic acidosis in 
patients with CKD. We are building a team of 15 to 20 Medical Science Liaisons, or MSLs, to facilitate 
education and answer questions from nephrologists about metabolic acidosis and veverimer.

Commercialize veverimer in the United States. If veverimer is approved by the FDA, we plan to initially 
commercialize it in the United States by deploying an 80- to 90-person specialty sales force targeting that 
subset of nephrologists most focused on treating patients with CKD. With this approach, we believe we can 
reach a majority of the approximately 600,000 patients with metabolic acidosis and Stage 3 to 5 CKD that are 
cared for by nephrologists. 

Commercialize veverimer outside of the United States with one or more partners. We believe there is a 
significant commercial opportunity for veverimer in markets outside the United States. To address these 
markets, we plan to seek one or more partners with international sales expertise who can commercialize 
veverimer in target markets, if approved.

Chronic Kidney Disease and Metabolic Acidosis Represent a Major Health Crisis

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Overview of CKD

CKD is a serious condition characterized by the gradual loss of essential kidney functions over time. In patients with 

CKD, normal fluid and electrolyte balance can no longer be maintained, and the excretion of metabolic end products, 
toxins and drugs is impaired. Furthermore, production and secretion of certain enzymes and hormones are disturbed.

According to the Centers for Disease Control and Prevention, or CDC, more than 37 million people in the United 
States are afflicted with CKD, representing an overall prevalence in the adult population of approximately 15%. The 
incidence of CKD is primarily driven by the increasing prevalence of diabetes and hypertension. The treatment of CKD 
adds a tremendous financial burden to the United States, with annual Medicare expenses for CKD in 2018 totaling 
approximately $114 billion, including approximately $79 billion on CKD costs and approximately $35 billion for end-
stage renal disease, or ESRD, costs. ESRD is total and permanent kidney failure that is treated with kidney dialysis or 
with a kidney transplant. There are approximately 750,000 people in the United States living on kidney dialysis or with a 
kidney transplant and approximately 125,000 new ESRD cases occur annually. Each year kidney disease kills more 
people than breast cancer or prostate cancer. According to the 2019 United States Renal Data System report, there 
were approximately 105,000 deaths from ESRD in 2017. There is a significant medical need to slow progression of 
kidney disease and reduce the number of patients progressing to kidney failure.

To help improve the diagnosis and management of kidney disease, the National Kidney Foundation, or NKF, has 

divided CKD into five stages. The severity of CKD at each stage is identified by the estimated glomerular filtration rate, 
or eGFR. Treatment during the first four stages of CKD focuses on ways to preserve kidney function for as long as 
possible. ESRD is the final stage of CKD in which the patient typically requires renal replacement therapy, i.e., dialysis 
or a kidney transplant, for survival.

Stages of CKD

Overview of Metabolic Acidosis

Diabetes and hypertension have long been recognized as modifiable risk factors for the progression of CKD. More 

recently, metabolic acidosis, a serious condition in which the body has accumulated too much acid, has also been 
identified as a key modifiable risk factor for the progression of CKD.

The human body generates acid every day through normal food intake and metabolism. Sources of acid include 
amino acids and nucleic acids from daily dietary intake and digestion of proteins. A healthy kidney counteracts these 
sources of acid through excretion mechanisms that rid the body of the excess acid and by restoring bicarbonate, a base 

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that buffers acid. Metabolic acidosis results when the kidneys can no longer excrete sufficient acid or reabsorb sufficient 
bicarbonate back into the blood stream to balance acid production. If left untreated, metabolic acidosis can result in 
accelerated kidney disease progression and has also been shown to negatively impact bone and muscle health.

Metabolic acidosis can be diagnosed by measuring the level of bicarbonate in the serum, which is routinely 

analyzed as part of a standard metabolic panel. Properly functioning kidneys will maintain a serum bicarbonate level of 
between 22 to 29 milliequivalents per liter, or mEq/L. A persistent serum bicarbonate level below 22 mEq/L indicates 
metabolic acidosis.

The prevalence and severity of metabolic acidosis in people with CKD progressively rises as kidney function 
declines. We estimate the prevalence of metabolic acidosis to be 9.4% of the estimated 15 million patients with Stage 
3a CKD, 18.1% of the estimated 6 million patients with Stage 3b CKD and 31.5% of the estimated 2 million patients with 
Stage 4 and Stage 5 CKD (non-dialysis patients), resulting in a total estimated prevalence of approximately 3 million 
patients with metabolic acidosis and CKD in the United States.

Metabolic Acidosis Poses a Significant Health Risk to Approximately 3 Million Patients with CKD in the United 
States

Metabolic acidosis can accelerate kidney disease progression and lead to bone demineralization and muscle 
wasting. In patients with CKD, adaptations by the kidneys in response to an accumulating acid load result in increased 
acid excretion per nephron by the remaining nephrons, but over time these adaptations have deleterious effects on 
kidney tissue, resulting in further kidney damage. The specific mechanisms that link metabolic acidosis to accelerated 
progression of kidney disease involve a cascade of events whereby acid accumulation leads to increased production of 
select peptides and hormones, including endothelin-1, aldosterone and angiotensin II, that increase the secretion of acid 
through the proximal and distal renal tubules of the remaining healthy nephrons in the compromised kidney. This 
provides a short-term beneficial impact on acid excretion, however, sustained over-production of these hormones 
results in long-term consequences, including inflammation, renal fibrosis, tubular atrophy and proteinuria. Over time, a 
vicious cycle of worsening metabolic acidosis and accelerated progression of kidney disease can result.

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An increased risk of fractures and renal osteodystrophy as well as muscle wasting and reduced physical functioning 

have also been associated with worsening metabolic acidosis. In patients with CKD whose kidney function is not 
sufficient to excrete their daily acid load, bone and muscle provide buffers for circulating acid, resulting in loss of bone 
density and increased muscle protein catabolism. Two large retrospective cohort analyses found that low serum 
bicarbonate level was independently associated with adverse health outcomes related to physical functioning, such as 
gait speed, quadriceps strength, failure to thrive and fractures/falls (Abramowitz et al., 2011; Reaven et al., 2019). 
Prospective studies of patients with metabolic acidosis and CKD have shown that treatment of metabolic acidosis 
increased muscle mass (de Brito-Ashurst et al., 2009; Dubey et al., 2018), improved muscle function (Abramowitz et al., 
2013), and improved physical function related quality of life (de Brito-Ashurst et al., 2015).

The importance of treating metabolic acidosis has been noted in both National and International kidney disease 
treatment guidelines. The NKF’s Kidney Disease Outcomes Quality Initiative, or KDOQI, guidelines and the International 
Society of Nephology’s Kidney Disease: Improving Global Outcomes, or KDIGO, guidelines recommend that in patients 
with CKD, serum bicarbonate be maintained above 22 mEq/L. Serum bicarbonate concentrations <22 mEq/L are 
associated with increased risk of CKD progression and increased risk of death.

There is Substantial Evidence that Low Serum Bicarbonate Levels are Associated with Increased Risk of CKD 
Progression and that Treating Metabolic Acidosis Can Slow the Progression of CKD

Several prospective clinical studies have shown that treating metabolic acidosis can slow the progression of CKD. 

In addition, multiple retrospective studies provide qualitative and quantitative evidence for the relationship between 
metabolic acidosis and the risk of progression of CKD across a wide range of baseline eGFRs and serum bicarbonate 
levels. 

In particular, five prospective trials (Garneata et al., 2016; de Brito-Ashurst et al., 2009; Phisitkul et al., 2010; Dubey 
et al., 2018; Di Iorio et al., 2019) studying patients with Stage 3 to 5 CKD and metabolic acidosis demonstrated slowing 
of CKD progression following an increase in serum bicarbonate with three different interventions, comprising a very low-
protein diet, oral sodium bicarbonate and oral sodium citrate. Increases in serum bicarbonate resulted in improved 
clinical outcomes, including fewer patients who progressed to ESRD and/or experienced significant declines of eGFR. 
Additionally, clinical trials reported by Goraya et al., 2013 and 2014 and Mahajan et al., 2010 showed that, in patients 
with Stages 2 to 4 CKD due to hypertensive nephropathy, increasing serum bicarbonate levels with sodium bicarbonate 
or a low protein diet rich in fruits and vegetables resulted in reduced markers of kidney injury and slower decline in 
eGFR. It should be noted that these trials were open-label trials that generally did not enroll patients with diabetes, heart 
failure, edema, uncontrolled hypertension, obesity, clinical evidence of cardiovascular disease, and other conditions 
related to sodium sensitive comorbidities. As such, the patients in these trials did not fully represent the general 
population of patients with metabolic acidosis and CKD. It is estimated that approximately 90% of late stage patients 
with CKD have sodium sensitive comorbidities.

Four large published retrospective database analyses show an association between higher serum bicarbonate 
levels and slower progression of CKD, independent of baseline eGFR and other factors such as age, sex, proteinuria, 
hypertension and diabetes (Dobre et al., 2013; Raphael et al., 2011; Shah et al., 2009; Tangri et al., 2011). In these four 
distinct large cohorts of patients with CKD, the analyses all demonstrate that clinical outcomes for patients with CKD 
with serum bicarbonate levels that are below normal (i.e., <22 mEq/L) are significantly worse compared to patients with 
normal serum bicarbonate levels (i.e., 22 to 29 mEq/L).

A validated model which is an accepted standard for predicting the risk of kidney disease progression has been 

published in The Journal of the American Medical Association, or JAMA (Tangri et al., 2011). This model includes 
serum bicarbonate as one of the key variables predicting chronic kidney disease progression. Dr. Navdeep Tangri, 
Associate Professor of Medicine in the Department of Medicine and Community Health Sciences and the Scientific 
Director of the Chronic Disease Innovation Center at University of Manitoba, presented data at the NKF 2018 Spring 
Clinical Meeting that describes an analysis of the relationship between serum bicarbonate and a composite renal 
outcome (≥40% reduction in eGFR or ESRD). This work demonstrated the quantitative relationship between an 
increase in serum bicarbonate and the reduction in risk of kidney disease progression. The relationship between serum 
bicarbonate and the renal outcome was approximately linear, independent of baseline kidney function (eGFR), and 
consistent across subgroups of patients with reduced eGFR and those with established metabolic acidosis. 
Furthermore, it showed that each 1 mEq/L increase in serum bicarbonate is associated with a 6% to 9% reduction in the 
risk of CKD progression.

The Unmet Medical Need for the Chronic Treatment of Metabolic Acidosis

8

The need to treat metabolic acidosis to slow the progression of CKD is well established, yet there are no FDA-
approved therapies for the chronic treatment of metabolic acidosis. Kidney disease treatment guidelines recommend 
treating metabolic acidosis when serum bicarbonate falls below 22 mEq/L, but in the absence of an FDA-approved 
treatment, physicians are left with recommending either protein-restricted diets to reduce acid intake or unapproved, 
over-the-counter supplements that have not undergone the scrutiny of rigorous clinical examination, including evaluation 
of safety, efficacy and their interactions with other drugs. 

Several analyses of retrospective databases show that, despite its prevalence, metabolic acidosis has gone largely 
untreated. One recent analysis of the diagnosis and treatment rates of metabolic acidosis in patients with CKD indicates 
that it is both underdiagnosed and undertreated. At the ASN Kidney Week 2019 Meeting, Dr. Tangri, presented an 
analysis of data from the Symphony Health Solutions Integrated Dataverse®, or IDV, which quantified the diagnosis and 
treatment rates of metabolic acidosis in patients with CKD. This analysis, which was derived from a cohort of 
approximately 87,000 patients, showed that only 21% of patients with confirmed laboratory evidence of metabolic 
acidosis and CKD had been diagnosed with metabolic acidosis and only 15% of these patients had been treated for 
metabolic acidosis. 

Three other analyses indicate that oral alkali supplements are used in less than 10% of patients with metabolic 
acidosis and CKD. An evaluation of data from the Chronic Renal Insufficiency Cohort, or CRIC, study (Dobre et al., 
2012) showed that less than 3%, or 28 of 1,039 patients with CKD and serum bicarbonate levels ≤22mEq/L were 
receiving an oral alkali supplement. A retrospective cohort study of adults in Manitoba, Canada, (Tangri et al., 2020), 
concluded that less than 6% of 5,368 patients with CKD and serum bicarbonate values between 12-22 mEq/L were 
receiving an oral alkali supplement. Because the Canadian health care system includes oral alkali supplements in their 
formulary, the analysis included an evaluation of the adherence to oral alkali supplements. The data show that, more 
than two thirds of patients (68%) had discontinued oral alkali therapy at one year. The use of oral alkali supplements in 
patients with metabolic acidosis and CKD who were enrolled in the TRCA-301 and TRCA-301E clinical trials was less 
than 10% of subjects enrolled in the study (Wesson et al., 2019).

Oral Alkali Use is Low in Patients with Metabolic Acidosis and CKD

Dobre, 2012, Tangri 2020, Wesson, 2019, Tangri 2019.

9

Our primary research indicates that most nephrologists understand the importance of treating metabolic acidosis to 

slow kidney disease progression, yet the analyses of actual treatment rates indicate a serious gap between the 
understanding and actual diagnosis and treatment. We believe that this gap is due to the lack of an FDA-approved 
chronic treatment for metabolic acidosis that can be used in the broad population of patients with metabolic acidosis and 
CKD, including those with sodium-sensitive comorbidities. 

The low use of oral alkali supplements may be explained by the lack of supportive data from blinded, randomized, 

placebo-controlled clinical trials that confirm the efficacy and safety of these unapproved supplements. While clinical 
research studies conducted in carefully selected patient populations have shown that oral alkali supplementation can 
result in slowing of CKD progression in patients with metabolic acidosis, two recent multicenter, placebo-controlled 
studies that used doses of sodium bicarbonate typically used in clinical practice, i.e., 0.5 to 1.0 grams, three times daily, 
both achieved very little difference in mean serum bicarbonate level between the active and placebo groups 
(approximately 1 mEq/L difference after 2 years) and showed no clinical benefits of sodium bicarbonate treatment (the 
BiCARB Study, Witham et al., ERA-EDTA Poster Presentation 2019; Melamed et al., 2019). The doses of sodium 
bicarbonate used in these trials may not have been large enough to achieve sufficient separation in serum bicarbonate 
in active- versus placebo-treated subjects. These doses may have been chosen because of concern for the deleterious 
effect of sodium that is delivered with orally administered alkali supplements, particularly in the CKD patient population. 
Each gram of sodium bicarbonate delivers 274 mg of sodium.

Approximately 90% of patients with later-stage CKD suffer from sodium-sensitive comorbid conditions, such as 
hypertension, cardiovascular disease, heart failure or edema, and require a sodium-restricted diet. KDIGO guidelines 
recommend that patients with CKD consume less than 2 grams of total sodium per day, but according to the CDC, the 
average diet in the United States includes approximately 3.4 grams of sodium each day. It has been demonstrated that 
achieving a 2 to 3 mEq/L increase in serum bicarbonate requires 4 to 6 grams of sodium bicarbonate (for an 80 
kilogram, or kg, patient) which results in an additional 1.1 to 1.6 grams of sodium added to the patient’s daily intake, 
which is already in excess of guideline recommendations (Abramowitz et al., 2013).

The effects of oral alkali supplementation on overall health and wellbeing also require further evaluation. One of the 
first multicenter, randomized, double-blind, placebo-controlled trials of oral sodium bicarbonate versus placebo (Witham 
et al., ERA-EDTA Poster Presentation 2019) was commissioned by the UK National Institute for Health Research 
(NIHR) Health Technology Assessment Programme to evaluate the clinical and cost-effectiveness of oral sodium 
bicarbonate in the management of older people with CKD and mild metabolic acidosis. The trial enrolled 300 non-
dialysis patients with Stage 4 or 5 CKD with serum bicarbonate concentrations <22 mEq/L recruited from 27 sites in the 
United Kingdom. Subjects were randomized to treatment with approximately 1.5 to 3 grams of sodium bicarbonate per 
day or placebo. The primary outcome and additional outcome measures were designed to assess physical function 
improvements and health related quality of life measures. Following 12 months of treatment, there was no significant 
treatment effect for the primary outcome of the between-group difference in the Short Physical Performance Battery at 
12 months (-0.4 points; 95% CI -0.9 to 0.1, p=0.15). There was no significant treatment benefit seen for any of the 
secondary outcomes. Adverse events were more frequent in the sodium bicarbonate arm (457 versus 400) and the time 
to commencing renal replacement therapy was similar in both groups (HR 1.22, 95% CI 0.74 to 2.02, p=0.43). Sodium 
bicarbonate provided no significant treatment effect and adverse events were more frequent in the bicarbonate arm. 
Health economic analysis showed lower quality of life and higher costs in the sodium bicarbonate arm at one year. In 
addition, placebo dominated sodium bicarbonate for all sensitivity analyses of incremental cost-effectiveness. The 
discontinuation rates in the BICARB trial were 25% and 30% at Year 1 in the sodium bicarbonate group and placebo 
group, respectively, and 47% and 46% at Year 2 in the sodium bicarbonate group and placebo group, respectively. 

Effects of sodium bicarbonate treatment on GI tolerability, blood pressure and volume status have been observed in 
some clinical trials. For example, in a randomized, placebo-controlled, open-label single-site study conducted by Dubey 
et al., 2018, six months of treatment with sodium bicarbonate was less well tolerated than placebo. This study evaluated 
a broader population of patients with metabolic acidosis and CKD, including those with sodium-sensitive comorbidities. 
Overall, adverse events occurred in significantly (p=0.01) more subjects in the sodium bicarbonate group compared to 
the control group. The safety profile of oral sodium bicarbonate showed that more subjects experienced GI side effects, 
fluid retention and worsening hypertension compared to placebo, despite significantly higher use of diuretics in the 
sodium bicarbonate group (p=0.008).

The use of sodium-based alkali supplements may also impact the effectiveness of other medications important to 
the treatment of many patients with CKD. In particular, renin-angiotensin-aldosterone-system inhibitors, or RAASi, are 
one of the only classes of agents that have been proven to slow CKD progression. Higher sodium intake has been 

10

associated with significant reductions in the effectiveness of these agents. A study by Lambers Heerspink and 
colleagues (Lambers Heerspink et al., 2012) evaluated the impact of low, medium and high levels of 24-hour sodium/
creatinine ratio in patients administered angiotensin II receptor blockers, or ARBs, versus non-RAASi treated patients. 
They concluded that “The renal and cardiovascular protective effects of ARB therapy compared with non-RAASi–based 
therapy attenuated in subjects with larger consumption of sodium so that in subjects with the highest sodium intake the 
treatment effects on hard renal and cardiovascular outcomes were completely annihilated.” Approximately 70% of 
patients with CKD are treated with RAASi to manage their hypertension.

Given the lack of a proven safe and efficacious agent to effectively raise serum bicarbonate and treat metabolic 
acidosis, we believe there is a significant unmet medical need for an FDA-approved agent to chronically treat metabolic 
acidosis in the approximately 3 million patients in the United States that are afflicted with metabolic acidosis and CKD. 

Our Solution—Veverimer

Veverimer is a novel, non-absorbed, orally-administered polymer that is designed to bind hydrochloric acid in the GI 
tract and remove it from the body through excretion in the feces, thereby decreasing the total amount of acid in the body 
and increasing serum bicarbonate. Veverimer is administered orally as a suspension in water. Veverimer removes acid 
without delivering additional sodium or other counterions, such as potassium or calcium, which, if approved, would allow 
for the chronic treatment of patients with common sodium-sensitive comorbidities such as hypertension, edema and 
heart failure.

Veverimer Target Product Profile

We have designed veverimer to target the following product profile:

•

Effectively Treat Metabolic Acidosis: Bind and remove sufficient amounts of acid such that a majority of the 
patients will achieve a clinically meaningful increase in serum bicarbonate.

• Well-Tolerated: Based on our long-term TRCA-301E trial results, patients reported GI-related adverse events at 
a similar rate to placebo. These events were generally mild, self-limited and did not require treatment or dose 
adjustment of veverimer.

•

•

•

•

Suitable for a Broad Population of Patients, including Patients with Sodium-Sensitive Comorbidities: Treat 
metabolic acidosis without delivering sodium or other counterions.

Compatible with Other Medications: Allow concomitant dosing of common CKD medications. Veverimer’s 
unique characteristics include a particle size designed to prevent systemic absorption and size-exclusion that 
provides high selectivity for hydrochloric acid.

Convenient, Once-Daily, Oral Administration: In our pivotal TRCA-301 and TRCA-301E trial, subjects self-
administered 3-, 6- or 9-gram doses, once daily, with high overall compliance.

Room-Temperature Stable: Current data demonstrate 12-month room temperature stability and we plan to have 
data supporting 24-month shelf-life at room temperature at the time of the commercial launch.

Veverimer Mechanism of Action

The human body generates acid every day through normal food intake and metabolism. Sources of acid include 
amino acids and nucleic acids from daily dietary intake and digestion of proteins. The daily load of nonvolatile acids 
from metabolic processes amounts to approximately 1 mEq per kg of body weight, or 50 to 100 mEq per day for adults. 
Prior studies with alkali supplementation have shown that neutralization of 40% to 80% (20 to 80 mEq) of the daily acid 
produced can increase serum bicarbonate levels (de Brito-Ashurst et al., 2009; Phisitkul et al., 2010).

Acid binding is a novel approach to treating metabolic acidosis and increasing serum bicarbonate levels without 
introducing deleterious counterions or metals. This approach mimics the physiologic response to acid removal seen with 
persistent vomiting or nasogastric suction that results in an elevated serum bicarbonate level. To achieve the desired 
effect of increasing serum bicarbonate with a convenient daily dose of less than 10 grams per day, an acid binding 
polymer should have an amine capacity to bind at least 5 mEq of proton/gram. Once protonated, the acid binding 
polymer needs to preserve the effect of the proton binding by not removing anions such as fatty and bile acids that 
represent precursors metabolized to bicarbonate in the blood. The complementary anion to be bound that ensures net 
acid removal from the GI tract is chloride, the smallest anion present in the GI tract.

11

Veverimer is a low-swelling, spherical polymer bead that is approximately 100 micrometers in diameter. It is a 

single, high molecular weight, crosslinked polyamine molecule. The size of veverimer prevents systemic absorption 
from the GI tract. The high degree of cross-linking within veverimer limits swelling and the overall volume in the GI tract, 
with the goal of facilitating good GI tolerability. The high amine content of veverimer provides proton binding capacity of 
approximately 10 mEq/gram of polymer. Size exclusion built into the three-dimensional structure of the polymer enables 
preferential binding of chloride versus larger inorganic and organic anions, including phosphate, citrate, fatty acids and 
bile acids. This size exclusion mechanism allows a majority of the binding capacity to be used for hydrochloric acid 
binding.

The mechanism of action of veverimer is illustrated below:

Veverimer Mechanism of Action

Our Development Program for Veverimer

Overview

Our NDA for veverimer is under review by the FDA through the Accelerated Approval Program for potential approval 

as the first and only FDA-approved therapy for the treatment of metabolic acidosis and slowing of kidney disease 
progression in patients with metabolic acidosis associated with CKD. It has been assigned a PDUFA goal date of 
August 22, 2020 for the potential approval to market veverimer in the United States. The FDA has indicated that it is 
currently planning to hold a CRDAC meeting to discuss the NDA. The key clinical trials included in the NDA are our 
successful 135-subject, Phase 1/2 trial, TRCA-101, a successful 217-subject, pivotal Phase 3 clinical trial, TRCA-301 
and a successful 196-subject, Phase 3 extension trial, TRCA-301E.

Both TRCA-101 and the pivotal study, TRCA-301, utilized change from baseline in serum bicarbonate as their 
primary endpoint. Eligible subjects who completed the 12-week treatment period in the pivotal TRCA-301 trial were 
invited to continue in our extension trial, TRCA-301E. The primary endpoint of the TRCA-301E trial was the assessment 
of the long-term safety profile of veverimer versus placebo. We believe that the data from the TRCA-101, TRCA-301 
and TRCA-301E clinical trials will provide sufficient clinical evidence of safety and efficacy to support the approval of our 
NDA for veverimer pursuant to the Accelerated Approval Program.

As part of the Accelerated Approval Program, we are currently conducting a confirmatory postmarketing trial, known 
as the VALOR-CKD trial, or TRCA-303, to evaluate the efficacy and safety of veverimer in delaying CKD progression in 
subjects with metabolic acidosis. We initiated the VALOR-CKD confirmatory postmarketing trial in the fourth quarter of 
2018.

12

Veverimer Clinical and Nonclinical Results

TRCA-301 Phase 3 Clinical Trial and TRCA-301E Extension Clinical Trial

TRCA-301 Phase 3 Clinical Trial

In May 2018, we completed our pivotal Phase 3 clinical trial, TRCA-301, and in March 2019, the results of this trial 
were published in The Lancet. The double blind, randomized, placebo-controlled trial enrolled 217 subjects with Stage 
3b or 4 CKD (an estimated glomerular filtration rate, or eGFR, of 20 to 40 mL/min/1.73m2) and low serum bicarbonate 
levels (between 12 and 20 mEq/L). At the beginning of the 12-week treatment period, subjects were randomized in a 4:3 
ratio to receive once-daily, or QD, veverimer or placebo. Subjects in the active group initially received a QD dose of 6 
grams of veverimer (2 packets). After week 4, bi-directional blinded dose adjustments to 3 grams/day (1 packet) or 9 
grams/day (3 packets) were allowed in order to maintain serum bicarbonate in the normal range. Subjects in the 
placebo group initially received 2 packets of placebo, with the same ability for bi-directional dose adjustments after 4 
weeks. The dose titration algorithm required down-titration at serum bicarbonate values of ≥ 27 to ≤ 30 mEq/L. Subjects 
with a serum bicarbonate level >30 mEq/L underwent an interruption of the study drug in accordance with the titration 
algorithm. Subjects were permitted to continue their existing oral alkali supplement during the trial, provided dosing 
remained stable. We conducted the trial at 47 sites in the United States and Europe, of which 37 sites enrolled patients.

TRCA-301 Pivotal Phase 3 Clinical Trial

The underlying comorbid conditions of veverimer-treated subjects and subjects in the placebo group in the 
TRCA-301 trial were well-balanced and included 97% hypertension, 65% type 2 diabetes, 44% left ventricular 
hypertrophy, and 31% congestive heart failure. During the three months prior to baseline, 12% of subjects had 
shortness of breath with exertion and 9% had edema or fluid overload. Nine percent of the total patient population in the 
trial reported the use of oral alkali therapy at baseline.

TRCA-301 Pivotal Phase 3 Trial Results

Primary and Secondary Endpoints

The serum bicarbonate levels of subjects were measured on day 1, week 1, week 2, and bi-weekly thereafter, up to 

and including week 14, which was a final post-treatment visit for those subjects not continuing into the TRCA-301E 
extension trial. The primary endpoint of the trial was an increase in serum bicarbonate level of at least 4 mEq/L or 
achieving a serum bicarbonate level in the normal range of 22 to 29 mEq/L, at the end of the 12-week treatment period. 
The secondary endpoint of the trial was the change from baseline in serum bicarbonate at the end of the 12-week 
treatment period.

Analysis of our TRCA-301 pivotal Phase 3 trial demonstrated that treatment with veverimer resulted in statistically 

significant increases in serum bicarbonate, meeting both the primary and secondary endpoints. After 12 weeks of 
treatment, 59.2% of subjects in the veverimer-treated group, compared with 22.5% of subjects in the placebo group, 
had an increase in serum bicarbonate level of at least 4 mEq/L or achieved a serum bicarbonate level in the normal 
range of 22 to 29 mEq/L, which was the primary endpoint of the trial. The secondary endpoint of the trial, the least 
squares, or LS, mean change from baseline to week 12 in serum bicarbonate, was 4.42 mEq/L in the veverimer-treated 
group, compared with 1.78 mEq/L in the placebo group. The mean change in serum bicarbonate from baseline to week 
12 was 4.5 mEq/L in the veverimer-treated group, compared with 1.7 mEq/L in the placebo group. The results of the 
primary and secondary endpoints were both highly statistically significant (p<0.0001).

13

Summary Data for Our Pivotal Phase 3 Clinical Trial, TRCA-301

Safety

The overall safety profile of veverimer observed in our pivotal Phase 3 trial, TRCA-301, is consistent with that 
expected for the general population of patients with Stage 3 to 5 non-dialysis CKD and with similar non-absorbed 
polymer drugs with a site of action in the gastrointestinal tract. The incidence of serious adverse events was low and 
balanced in the two treatment groups. The types of serious adverse events were consistent with those expected in the 
study population, and none of the serious adverse events were assessed to be related to treatment by the trial 
investigator, Medical Monitor or Drug Safety and Pharmacovigilance Team. There were two deaths in the study and 
both of these occurred in the placebo group.

Veverimer was well tolerated in our pivotal Phase 3 trial, TRCA-301. In total, over 95% of subjects in each of the 
groups completed the trial. Overall treatment-related adverse events occurred in 9.7% of subjects in the placebo group 
and 13.7% of veverimer-treated subjects. The most common treatment-related adverse events were mild to moderate 
GI disorders, which occurred in 5.4% of subjects in the placebo group and 12.9% of veverimer-treated subjects. The 
treatment-related GI adverse events that occurred in more than one subject in the trial included diarrhea, flatulence, 
nausea and constipation. The only other treatment-related adverse event that occurred in more than one subject was 
paresthesia (1.1% of subjects in the placebo group and 0.8% of veverimer-treated subjects). There were no apparent 
effects of veverimer on serum parameters, such as sodium, calcium, potassium, phosphate, magnesium, or low-density 
lipoprotein observed in the trial that would indicate off-target effects of veverimer. A high serum bicarbonate level, 
defined as greater than 30 mEq/L, was observed transiently in 2 subjects, or 0.9%. Discontinuation of veverimer per the 
protocol-defined dosing algorithm resulted in normalization of serum bicarbonate in these subjects.

TRCA-301E Extension Trial

The TRCA-301E trial was a blinded, 40-week extension of the 12-week TRCA-301 trial, which randomized 217 
subjects with non-dialysis dependent CKD and metabolic acidosis to treatment with veverimer (N=124) or placebo 
(N=93). Two hundred eight (208; 95.9%) subjects completed the 12-week treatment period in the TRCA-301 trial and 
had the option to continue into the extension trial and receive the same blinded treatment (veverimer or placebo) to 
which they were assigned in the parent study. Of these, one hundred ninety-six subjects (196; 94.2%), (114 in the 
veverimer group and 82 in the placebo group) elected and were qualified to continue in the extension trial. One hundred 
eleven (111; 97.4%) subjects in the veverimer group and 74 (90.2%) subjects in placebo group completed the one year 
treatment period. 

14

TRCA-301E Phase 3 Extension Clinical Trial

TRCA-301E Clinical Trial Results

The TRCA-301E trial met its primary and all secondary endpoints. The primary endpoint of the TRCA-301E trial was 

the assessment of the long-term safety profile of veverimer versus placebo. Fewer subjects on veverimer than on 
placebo discontinued the 40-week treatment period prematurely (2.6% versus 9.8%, respectively). The incidence of 
serious adverse events was 1.8% for subjects in the veverimer group and 4.9% for subjects in the placebo group, and 
none were assessed to be related to study drug by the trial investigator, Medical Monitor or Drug Safety and 
Pharmacovigilance Team. The only adverse event with a between-group frequency difference of >5% was headache, 
which was more common in the placebo group. Gastrointestinal disorders adverse events occurred in 21.4% of subjects 
in the veverimer group and in 25.9% of subjects in the placebo group. No subjects in the veverimer group discontinued 
study treatment due to an adverse event. One subject (1.2%) in the placebo group discontinued study treatment due to 
an adverse event of end-stage renal disease.

The statistical analysis plan for the TRCA-301E trial also specified a comparison of the veverimer and placebo 
groups for the time to the composite clinical endpoint of death (all-cause mortality), dialysis/kidney transplant (renal 
replacement therapy) or a ≥50% decline in estimated glomerular filtration rate, or eGFR, (taken together, DD50) over 
the combined (TRCA-301 and TRCA-301E) 52-week treatment period. Of the 124 subjects randomized to the veverimer 
group, 5 (4.0%) subjects had a DD50 event. There were no deaths in the veverimer group and one veverimer-treated 
subject initiated dialysis during the 52-week treatment period. Of the 93 subjects randomized to the placebo group, 10 
(10.8%) subjects had a DD50 event, including four subjects who died and one who initiated dialysis during the 52-week 
treatment period. The time to DD50 was prolonged in the veverimer group compared to the placebo group, with an 
annualized DD50 incidence rate, calculated as 100 times the number of events divided by the total person-years, of 
4.2% in the veverimer group versus 12.0% in the placebo group (p = 0.0224). The TRCA-301/TRCA-301E clinical trials 
were not designed or powered to assess all-cause mortality and/or the progression of CKD outcomes; they enrolled only 
217 subjects and followed them over a one-year treatment period to support the long-term safety and efficacy profile of 
veverimer. Nevertheless, a 65% reduction in the annualized event rate of the composite endpoint of all-cause mortality 
and progression of CKD (DD50) in veverimer-treated subjects versus subjects in the placebo group was observed.

15

TRCA-301 / TRCA-301E Trial Results (52 Weeks)
Prespecified Time-to-Event Analyses

The secondary endpoints of the TRCA-301E trial assessed the durability of effect of veverimer, both on serum 
bicarbonate levels and on measures of physical function, over the 52-week treatment period for those subjects who 
participated in the TRCA-301E trial. All were met with high statistical significance.

The durability of effect of veverimer was assessed by comparing the changes in serum bicarbonate from baseline 
between veverimer versus placebo subjects who completed the 52-week treatment period. Sixty-three percent of the 
110 veverimer subjects treated for 52 weeks exhibited an increase in serum bicarbonate level of at least 4 mEq/L or 
achieved a serum bicarbonate level in the normal range of 22 to 29 mEq/L, compared with 38% of the 74 placebo 
subjects who completed 52 weeks of treatment (p=0.0015). The LS mean change in serum bicarbonate from baseline to 
end of treatment in the veverimer group was 4.7 mEq/L, compared with 2.7 mEq/L in the placebo group (p=0.0002). In 
veverimer-treated subjects, the proportion of subjects achieving an increase of at least 4 mEq/L or normalization of 
serum bicarbonate and the magnitude of the change in serum bicarbonate levels from baseline to Week 52 were both 
similar at Week 12 (61% and 4.6 mEq/L, respectively) and Week 52 (63% and 4.7 mEq/L, respectively). We believe 
these results provided evidence of the long-term durability of serum bicarbonate effect of veverimer-treated group 
compared to placebo. 

Measures of physical function were assessed through the self-reported responses to the KDQOL Physical 
Functioning Survey and the Repeated Chair Stand Test. Improvement from baseline to end of treatment in the self-
reported responses to the KDQOL Physical Functioning Survey was significantly greater in the veverimer group (11.4 
points) compared to the placebo group (-0.7 points), with a between-group difference of 12.1 points in favor of 
veverimer (p<0.0001). The 11.4-point improvement in the veverimer group far exceeded the 3- to 5-point change cited 
in the literature as the minimal clinically important difference for KDQOL subscales. 

Improvement from baseline to end of treatment in physical function using the Repeated Chair Stand Test was also 

significantly greater in the veverimer group (4.3 seconds faster) compared to the placebo group (1.4 seconds faster), 
with a between-group difference of 2.9 seconds in favor of veverimer (p<0.0001). The placebo-adjusted improvements 
in favor of veverimer-treated subjects in the two measures of physical function at week 52 approximately doubled 
compared to the results at week 12 observed in the parent trial, TRCA-301. The 4.3-second improvement in the time to 
complete the Repeated Chair Stand Test far exceeded the 1.7-second improvement cited in the literature as the 
minimal clinically important difference for improvement in this measure of objective physical function. We believe the 

16

results from the KDQOL Physical Functioning Survey and the Repeated Chair Stand Test are consistent with each other 
and both indicate a clinically meaningful improvement in physical function and related aspects of quality of life for 
veverimer-treated subjects.

TRCA-301 / TRCA-301E Trial Results (52 Weeks)
Clinically Meaningful Improvement in Physical Function

An interesting concept has emerged in the academic literature that describes CKD as a clinical model of premature 
aging, indicating that patients with CKD often experience many of the complications of aging, but at younger ages than 
the general population. This includes elevated rates of aging-related disorders, including markedly reduced physical 
function compared to adult populations of the same age. This is a major problem because impaired physical function 
leads to significant morbidity, including high rates of falls and fractures, and is also a risk factor for death. Therefore, 
preserving physical function is critical in patients with CKD. Dr. Matthew Abramowitz, Associate Professor of Medicine 
at the Albert Einstein College of Medicine, has conducted a post-hoc analysis of age-related physical function 
improvements that were observed with veverimer in our TRCA-301E long-term extension trial. First, the analysis 
showed that at baseline, 45% of our study population was slower in performing the Repeated Chair Stand Test than the 

17

average 80 to 89-year old, despite an average age of 62 years. Second, the mean improvement of 4.3 seconds in 
Repeated Chair Stand Test time observed in veverimer-treated subjects in the TRCA-301E study was greater than the 
difference in mean expected test-time performance between individuals in their 80s and those in their 60s, suggesting 
that the 4.3 second improvement in test time observed in veverimer-treated subjects is equivalent to an approximately 
20-year reduction in aging-related physical functioning. Dr. Abramowitz concluded that interventions that improve
physical function in patients with CKD have the potential to restore a substantial proportion of age-predicted loss of
performance.

TRCA-101 Phase 1/2 Clinical Trial

In 2016, we completed our Phase 1/2 trial, TRCA-101, a 135-subject, double-blind, randomized, placebo-controlled 
trial of veverimer. In this trial, subjects received either placebo or one of four different dosing regimens of veverimer for 
two weeks as shown in the diagram below:

Veverimer Phase 1/2 Clinical Trial

135 subjects 
eGFR 20 to <60 
ml/min/1.73m2 and 
serum bicarbonate
12 to 20 mEq/L

t
n
e
m
t
a
e
r
T

s
y
a
D
4
1

BID = Twice daily, QD = Once daily

Part 1 (BID)

Veverimer 1.5 g BID (n=25)

Veverimer 3.0 g BID (n=25)

Veverimer 4.5 g BID (n=26)

Placebo – BID (n=25)

Part 2 (QD)

Veverimer 6.0 g QD (n=28)

Placebo – QD (n=6)

Safety 
Follow-up
2-week
Period

The subjects were patients with Stage 3 or 4 CKD with serum bicarbonate levels at baseline between 12 and 20 
mEq/L. The treatment groups were demographically well matched, and the mean serum bicarbonate levels at baseline 
ranged between 17.5 and 18.0 mEq/L across the treatment groups. Comorbid conditions of the subjects enrolled in 
TRCA-101 included 93% of patients with hypertension, 70% with type 2 diabetes, 29% with left ventricular hypertrophy 
and 21% with congestive heart failure. We conducted the trial at five in-patient clinical research units where the subjects 
were monitored for the duration of the 2-week treatment period. During the 16-day in-unit residence (including the 14-
day treatment period), clinical trial subjects were given a diet controlled for protein, caloric content, anions, cations and 
fiber, in accordance with dietary recommendations for patients with CKD. The potential renal acid load, or PRAL, value 
was calculated for the daily meal plans to ensure that the trial diet was neither acidic nor basic. Daily PRAL values 
averaged 0.8 mEq/day. Average protein intake during the trial was 0.7 g/kg/day.

The serum bicarbonate levels of subjects were measured on a daily basis. Statistically significant increases in 
serum bicarbonate levels were observed in all veverimer-treated groups within 24 to 72 hours of initiation of therapy. 
After 14 days of treatment, the mean increase in serum bicarbonate levels from baseline in each of the veverimer-
treated groups was between 2.95 and 3.83 mEq/L, with a mean serum bicarbonate increase of 3.3 mEq/L in the 
combined veverimer group. All these results were highly statistically significant (p-value < 0.0001), as were the 
increases from baseline as compared to the placebo group, whose mean serum bicarbonate level decreased by 0.18 
mEq/L. The serum bicarbonate levels of all subjects were measured during the off-treatment follow-up period. In the 
veverimer-treated groups, the mean levels had reverted to near baseline levels after two weeks off treatment.

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Veverimer Significantly Increased Mean Serum Bicarbonate Throughout the
2-week Treatment Period, with Serum Bicarbonate Rapidly Returning
Toward Baseline After Treatment Discontinuation

In our Phase 1/2 trial, veverimer was well-tolerated. All subjects completed treatment and remained in the trial 
through the applicable follow-up period. All treatment emergent adverse events, or TEAEs, were mild or moderate, and 
there were no serious adverse events. The most common TEAE was diarrhea which was reported by 20.2% of 
veverimer-treated subjects as compared to 12.9% of subjects in the placebo group. All cases of diarrhea were mild, self-
limited, and none required treatment. There were no apparent effects of veverimer on parameters, such as sodium, 
calcium, potassium, phosphate, magnesium, or low-density lipoprotein observed in the trial that would indicate off-target 
effects of veverimer. There were no apparent effects on vital signs, such as blood pressure, heart rate, respiratory rate 
or temperature, or body weight. The results of this trial were published in the Clinical Journal of the American Society of 
Nephrology (Bushinsky, et al., 2018).

Nonclinical Studies

We have conducted a range of nonclinical in vivo and in vitro studies to assess the mechanism of action, 

pharmacology, pharmacokinetics, and toxicology of veverimer.

Nonclinical in vitro and in vivo pharmacology studies demonstrated robust proton and chloride binding and retention 

by the veverimer polymer resulting in removal of hydrochloric acid from the body. In vitro studies demonstrated that 
veverimer can selectively bind and retain chloride under conditions that mimic the pH, transit times, and ionic content of 
various compartments of the GI tract. The marked binding capacity and selectivity for chloride observed with veverimer 
in vitro translates into in vivo pharmacological effects. Removal of acid by veverimer results in a dose-dependent 
increase in mean serum bicarbonate, as observed in rats with adenine-induced nephropathy and low serum 
bicarbonate. A significant increase in fecal chloride relative to controls suggests that veverimer retained its functional 
integrity during transit through the rat GI tract. This study in an animal model of CKD illustrated the potential of 
veverimer to correct depleted serum bicarbonate levels, the hallmark of metabolic acidosis.

19

Safety pharmacology assessments of the central nervous, respiratory, cardiovascular, and GI systems did not 
identify any veverimer-related adverse effects at oral doses up to 4 g/kg (central nervous system, respiratory) and up to 
2 g/kg (GI) in rats and at 2 g/kg (cardiovascular) in dogs.

Lack of veverimer absorption from the GI tract was demonstrated in both rats and dogs administered a single oral 

dose of radiolabeled [ 14 C]-veverimer. Because radioactivity was not observed in the plasma of either species, 
metabolism was not evaluated. The lack of absorption, in conjunction with the in vivo pharmacology study in rats, 
supports that veverimer is not metabolized or degraded but maintains functional, and therefore, structural integrity 
during transit through the GI tract following oral administration. The results of the radiolabeled veverimer absorption, 
distribution, metabolism, and excretion, or ADME, studies demonstrating a lack of oral bioavailability is consistent with 
the physicochemical properties of veverimer (insolubility in aqueous and organic solvents, particle size averaging 100 
micrometers in diameter, and particle stability).

Repeat-dose, GLP toxicology studies of up to 26 weeks duration in rats and 39 weeks duration in dogs 

demonstrated that veverimer has a very low order of toxicity and was well tolerated. There were no effects on male or 
female reproductive organs and local GI tolerance was good. The no observed adverse effect level, or NOAEL, in both 
the rat and dog in the chronic toxicity studies was the highest dose of 2 g/kg/day; this dose of veverimer is 13-fold 
higher than the highest proposed human dose of 9 g/day (0.15 g/kg/day based on a 60-kg patient). We also established 
that the polymer has no effect on the absorption of fat-soluble vitamins, such as A, D2, D3, and E. Reproductive toxicity 
studies indicate there are no adverse veverimer-related effects on maternal reproductive function. We are currently 
discussing the embryofetal development and teratogenicity data with the FDA with respect to pregnancy label language. 
We do not expect these discussions to lead to any change in the pregnancy risk statement in the anticipated label due 
to the non-absorbed nature of veverimer. Veverimer was not mutagenic or clastogenic when evaluated in genotoxicity 
studies. Given the non-absorbed nature of veverimer, we were granted a waiver from FDA for fertility and early 
embryonic development (Segment I) and peri/postnatal development (Segment III) reproductive toxicity and 
carcinogenicity studies.

Drug-drug Interaction Studies

As part of our NDA filing, we submitted data evaluating the potential for drug-drug interactions, or DDIs, to occur 
with veverimer. Veverimer is not systemically absorbed; therefore, its potential for DDIs is limited to those that occur in 
the GI tract (i.e., direct binding or indirect effects resulting from transient increases in gastric pH). We assessed the 
potential for DDIs with veverimer both in vitro and in vivo in healthy subjects. 

In vitro binding to veverimer was evaluated with 16 drugs of varying molecular weight and charge. Human DDI 
studies were conducted with the 2 drugs (furosemide, aspirin) that showed the most in vitro binding to veverimer. The 
effect of veverimer on gastric pH was measured continuously in vivo in healthy subjects using a microelectrode pH 
probe placed in the gastric compartment. Human DDI studies were conducted with 3 orally administered drugs with pH-
dependent solubility (dabigatran, furosemide, warfarin).

Veverimer did not bind to any of the positively charged, neutral or zwitterionic drugs tested in vitro. It bound to 3 
small (Molecular Weight <332 Da), negatively charged drugs (aspirin, ethacrynic acid, furosemide); these interactions 
were reduced or eliminated in the presence of physiologically relevant concentrations of chloride. We tested aspirin and 
furosemide in vivo in human DDI studies conducted in healthy volunteers and these drugs showed a change in 
exposure of < 20% when co-administered with veverimer.

Veverimer increased gastric pH by approximately 3 and 1.5 pH units in fasted and fed subjects, respectively. The 

increase in gastric pH was short-lived, with a peak within 1 hour after dosing and a return to baseline after 
approximately 1.5 hours and approximately 3 hours under fasting and fed conditions, respectively. The effect of 
veverimer on gastric pH was similar in the presence and absence of omeprazole. The bioavailability of orally 
administered drugs that are weak acids and weak bases can be affected by changes in gastric pH. Therefore, the 
clinical relevance of the transient increase in gastric pH caused by veverimer was evaluated in vivo in human DDI 
studies conducted in healthy volunteers using three drugs with pH-dependent solubility: furosemide (weak acid), 
dabigatran (weak base) and warfarin (weak acid). These drugs showed a change in exposure of < 20% when co-
administered with veverimer.

Based on the results of our DDI studies, we do not believe we need to recommend dosing separation for co-
administered drugs with veverimer, either due to direct binding interactions or due to pH sensitivity. We believe it is 
reasonable to propose dosing instructions for veverimer that do not include any dose separation recommendations for 

20

other oral medications. However, ultimate label instructions regarding co-administration of veverimer with other oral 
medications will be subject to FDA review and approval.

Veverimer Regulatory Pathway and Confirmatory Postmarketing Trial, VALOR-CKD

Our Development of Veverimer Pursuant to the Accelerated Approval Program

The FDA is reviewing the NDA for veverimer through the Accelerated Approval Program. The FDA’s Accelerated 
Approval Program allows for drugs for serious conditions that address an unmet medical need to be approved based on 
a surrogate endpoint that is reasonably likely to predict clinical benefit. Surrogate endpoints are used instead of clinical 
outcomes in some clinical trials. Surrogate endpoints are used when the clinical outcomes might take a very long time to 
study, or in cases where the clinical benefit of improving the surrogate endpoint, such as controlling blood pressure, is 
well understood. Clinical trials are needed to show that surrogate endpoints can be relied upon to predict, or correlate 
with, clinical benefit. Surrogate endpoints that have undergone this testing are called validated surrogate endpoints and 
those are accepted by the FDA as evidence of benefit.

Surrogate endpoints that the FDA determines are reasonably likely to predict clinical benefit may be used to support 

approval, in some cases, but are not yet validated. This is accomplished through the FDA’s Accelerated Approval 
Program, which is intended to provide patients with serious diseases more rapid access to promising therapies. 
Because such surrogate endpoints have not been validated, sponsors relying on them are generally required to verify 
the predicted clinical benefit of their products with confirmatory postmarketing clinical trials.

Veverimer is currently under review for approval pursuant to the FDA’s Accelerated Approval Program based upon 

meeting the following three criteria:

•

Treatment of a Serious Condition: There is evidence that the progression of CKD to ESRD is a serious 
condition and the chronic treatment of metabolic acidosis may slow the progression of CKD.

• Meaningful Advantage over Available Therapy: There is an unmet need for chronic therapies that slow 
progression to ESRD in patients with CKD and metabolic acidosis. There are no FDA-approved chronic 
treatments for metabolic acidosis and there exists a large population of patients with metabolic acidosis and 
CKD. 

•

Demonstrates an Effect on an Endpoint That Is Reasonably Likely to Predict Clinical Benefit: There are a 
number of prospective and retrospective studies that show that serum bicarbonate is an appropriate surrogate 
endpoint and that increasing serum bicarbonate is reasonably likely to predict slowing of progression of CKD.

Our TRCA-301 Phase 3 trial serves as the pivotal trial in our NDA submission for veverimer. 

VALOR-CKD Clinical Trial 

As a condition of filing our NDA pursuant to the Accelerated Approval Program, we have committed to conduct our 

confirmatory postmarketing trial, VALOR-CKD, which is designed to demonstrate that veverimer provides a clinical 
benefit (i.e., improves how the patient feels, functions or survives) in addition to increasing serum bicarbonate levels. If 
we receive FDA approval for veverimer, but do not complete the postmarketing trial with due diligence, or if the 
postmarketing trial fails to show a clinical benefit of veverimer treatment, the FDA may revoke its approval of veverimer.

In the fourth quarter of 2018, we initiated the VALOR-CKD postmarketing trial to evaluate the efficacy and safety of 

veverimer in delaying CKD progression in subjects with metabolic acidosis. 

21

VALOR-CKD Postmarketing Clinical Trial

The protocol for the VALOR-CKD trial was designed in collaboration with a steering committee of international key 
opinion leaders in the fields of chronic kidney disease progression and metabolic acidosis and with input from the FDA. 
It is a multicenter, randomized, double-blind, placebo-controlled trial of subjects with Stage 3b or 4 CKD (eGFR of 20 to 
40 mL/min/1.73m2) and metabolic acidosis (serum bicarbonate levels of 12 to 20 mEq/L). The eligibility criteria for the 
VALOR-CKD trial are similar to those used in our pivotal Phase 3 trial, TRCA-301. Based on observations from the 
TRCA-301 trial, we have strengthened the screening requirements in the VALOR-CKD trial to enable enrollment of 
subjects with confirmed metabolic acidosis at baseline. Subjects will be treated with veverimer (3, 6 or 9 g QD) or 
placebo, with titration to attempt to maintain serum bicarbonate in the normal range (22 to 29 mEq/L).

The primary endpoint of the VALOR-CKD trial compares the time to first renal event, with a renal event defined as a 

≥ 40% reduction in eGFR, progressing to ESRD, or renal death, in veverimer-treated subjects versus subjects in the 
placebo group. Subjects will be followed in the trial until the independent blinded Clinical Endpoint Committee has 
positively adjudicated the targeted number of primary endpoint events, which we estimate will be approximately four 
years following full enrollment. Based on the magnitude of the increase in serum bicarbonate observed in our pivotal 
Phase 3 trial, TRCA-301, and the inverse relationship between serum bicarbonate and risk of renal events described by 
the Predictive MA Model, we have determined that randomizing 1,600 subjects to veverimer or placebo in a 1:1 ratio will 
result in 90% power to show a 30% to 35% reduction in renal events in the VALOR-CKD trial.

The VALOR-CKD protocol specifies that a blinded event rate interim analysis may be performed two years after the 
last subject is randomized and is designed to enable an increase in the size of the trial based on total number of events 
at the time of the blinded interim analysis. The protocol also specifies an interim analysis may be performed when at 
least half of the planned number of primary endpoint events have occurred. At such time, the trial may be stopped early 
for efficacy, the sample size may be increased, or the trial may continue without changes. We estimate that the interim 
analysis may occur when all patients have been on treatment for approximately two to three years.

We plan to complete the VALOR-CKD trial after the FDA’s review of our NDA for veverimer and potential approval 

of veverimer. VALOR-CKD is a time-to-event study, and we estimate it will take approximately 4 years after 
randomization is complete to accrue the number of events necessary to complete the study. Assuming successful 
completion of the VALOR-CKD trial, we plan to file a supplemental NDA, or sNDA, that incorporates results from the 
VALOR-CKD trial.

Market Opportunity 

We estimate that there are approximately 3 million patients in the United States afflicted with metabolic acidosis and 
Stage 3 to 5 non-dialysis CKD and that approximately 1.1 million of such patients are under the care of a physician. Our 
initial target market will be focused on the approximately 600,000 patients with metabolic acidosis and CKD that are 
under the care of a nephrologist. We have identified approximately 5,000 nephrologists who treat approximately 80% of 
these patients. Given the demographics of the CKD patient population, these nephrologists are geographically 
concentrated on the west coast, the northeast and the southeast of the United States. 

We have conducted multiple surveys of practicing nephrologists designed to understand their knowledge of the link 
between treating metabolic acidosis and the slowing of CKD progression. In a survey of 100 nephrologists, conducted in 
2019, we found that over 80% believed that treating metabolic acidosis was moderately, very or extremely important to 
slow kidney disease progression.

We have also conducted multiple surveys of practicing nephrologists to quantify the expected market for veverimer, 

if approved. In a survey of 100 nephrologists, conducted in 2019, 79% indicated that they would definitely or probably 

22

prescribe veverimer, based on a veverimer target product profile which included information from the results of our 
TRCA-301E clinical trial that were published in The Lancet in June 2019. 

We have also evaluated, through health and economic outcomes analyses, the potential savings to third-party 
payers and health benefits that could be derived through the treatment of patients with metabolic acidosis and CKD. In 
2019, we completed a retrospective health economic study of pre-dialysis patients with Stage 3 to 5 CKD. The study 
evaluated renal outcome events and healthcare costs for 51,558 pre-dialysis patients with Stage 3 to 5 CKD derived 
from electronic health records, or EHRs, and corresponding medical claims from a national de-identified electronic 
medical record dataset over a 10-year period (2007 to 2017). The results of the study showed the following health 
impacts of metabolic acidosis over a 2-year period: 

•

•

•

3 times higher likelihood of death: 31% of patients with metabolic acidosis and CKD at baseline died versus 
10% of patients with CKD with normal serum bicarbonate at baseline; 

3.6 times higher likelihood of starting dialysis: 18% of patients with metabolic acidosis and CKD at baseline 
started dialysis versus 5% of patients with CKD with normal serum bicarbonate at baseline; and 

1.5 times higher likelihood to progress by 1 or more CKD stages: 38% of patients with metabolic acidosis and 
CKD at baseline progressed 1 or more stages of CKD versus 25% of patients with CKD with normal serum 
bicarbonate at baseline.

In addition, the results of the study showed that healthcare costs were approximately $40 thousand per patient per 

year higher for patients with metabolic acidosis versus patients that had normal serum bicarbonate levels. The results of 
the study also suggest that each 1 mEq/L increase in serum bicarbonate can be associated with a 7% decrease in 
monthly all-cause healthcare costs (p<0.0001). The potential savings to payers and health benefits derived through 
these analyses were independent of the patient’s status with regard to CKD stage, albumin-to-creatine ratio, sex, age, 
race, diabetes, heart failure, hypertension or Charlson Comorbidity Score (an index of comorbidity burden).

Due to the absence of an FDA-approved product for chronic metabolic acidosis, we cannot model a treated versus 

untreated population for these health economic studies. As such, we relied on evaluating similar patient populations, 
contrasting those with metabolic acidosis and those with a normal serum bicarbonate level.

Additionally, we have conducted multiple surveys of third-party payers representing healthcare coverage for over 
200 million U.S. lives. Based on our surveys, as the first and only potential FDA-approved therapy for the treatment of 
metabolic acidosis and slowing of kidney disease progression in patients with metabolic acidosis associated with CKD, 
we believe the majority of third-party payers will provide coverage for veverimer, which may be subject to prior 
authorization and/or other forms of utilization management. We also plan to offer veverimer through both retail and 
specialty-pharmacy providers to help ensure appropriate physician support and patient access to therapy. In addition, 
we have evaluated the healthcare insurance coverage mix of our target patient population and we estimate that the 
majority of these patients will have healthcare insurance coverage through 1) Medicaid programs, Medicare with low-
income subsidy programs or Veterans Administration/Department of Defense programs which typically cover 
prescriptions with a low co-pay obligation for patients or 2) a commercial healthcare insurance plan where we typically 
can provide co-pay assistance to patients.

Given the high unmet need for an FDA-approved chronic treatment for patients with metabolic acidosis and CKD, 

the broad understanding among nephrologists that treatment of metabolic acidosis can slow CKD progression, the 
favorable response from nephrologists to veverimer’s target product profile, the potential health and economic benefits 
from treating metabolic acidosis, and our survey results which suggest that health insurers are open to providing 
coverage for veverimer, we believe that there is a significant opportunity for veverimer in the United States, if approved, 
as the first and only FDA-approved therapy for the treatment of metabolic acidosis and slowing of kidney disease 
progression in patients with metabolic acidosis associated with CKD. 

In addition, we believe there is a significant market opportunity for veverimer outside the United States, if approved. 

We intend to seek one or more partners with international sales expertise who can obtain regulatory approval and sell 
veverimer in target markets. We anticipate that, in certain markets, additional clinical trials of veverimer may be required 
to obtain regulatory approval and/or ensure market access.

Commercial Strategy and Plan

23

We plan to initially focus our commercial launch of veverimer, if approved, on a subset of 5,000 nephrologists in the 

United States who care for approximately 80% of the 600,000 patients with metabolic acidosis and CKD seen by 
nephrologists. In anticipation of our potential approval, we have hired our commercial leadership team and initiated our 
disease awareness campaign. 

In 2019 we expanded our disease awareness campaign with a major presence at the 2019 American Society of 
Nephrology ASN Kidney Week meeting, where we interacted with over 1,000 attendees. We also initiated extensive 
disease awareness outreach to engage with nephrologists through our MetabolicAcidosisInsights.com website, 
sponsoring disease-related publications, and our Neph+ app, which provides easy access to publicly available kidney 
disease treatment guidelines, commonly used calculations for kidney disease and other informational resources for 
nephrologists. 

We plan to hire a specialty sales force of approximately 80 to 90 individuals whom we plan to deploy in mid-2020 to 

further our disease awareness efforts and, subject to approval, detail veverimer to our target market of 5,000 
nephrologists. Our comprehensive disease awareness and education campaign is designed to communicate the 
existing evidence that increasing serum bicarbonate in patients with metabolic acidosis and CKD slows the progression 
of CKD and can potentially improve how patients feel and function. We believe the broad understanding of this evidence 
will help to establish and increase the urgency to treat patients with this serious condition.

If veverimer is approved, we plan to engage with nephrologists through multiple communication channels to provide 

them with the veverimer prescribing information and appropriate supplemental marketing materials to augment that 
information. This will include branded materials for distribution to nephrologists, a branded website, a nephrologist-
focused digital marketing campaign, participation in congresses and nephrology-focused events, and speaker programs 
that educate nephrologists on current disease knowledge and treatment options.

We are currently engaging with third-party payers to seek favorable coverage for veverimer, if approved. In 2018 
and 2019, we presented information about the design and results of our health economic study and shared veverimer 
clinical trial data in three separate third-party payer forums: 1) through an in-person survey involving 15 third-party 
payers covering over 200 million patient lives, 2) through a Payer Working Group Meeting involving four third-party 
payers representing over 150 million lives and 3) through face-to-face individual meetings with 34 third-party payers 
representing approximately 220 million lives. Health insurance payers have indicated their perception of the likelihood of 
veverimer coverage is influenced by the following potential attributes of veverimer: first and only FDA-approved 
treatment, disease modifying, safe and efficacious and significant direct healthcare cost savings. We have hired a team 
of 12 market access professionals to continue appropriate engagement with third-party payers. We are proactively 
targeting third-party payers that represent 95% of covered lives in the United States. Our goal is to meet with 
approximately 100 third-party payers in the United States prior to the PDUFA goal date for veverimer of August 22, 
2020. 

We plan to engage in scientific exchange with nephrologists through our Medical Affairs team. We have trained and 
plan to deploy our MSL team at the end of March 2020, concurrent with the National Kidney Foundation Spring Meeting. 
We intend to increase the size of our team of MSLs to 20 in 2020.

A number of peer-reviewed publications will provide support for our disease awareness campaign and the launch of 

veverimer, if approved. In 2019, the results of our TRCA-301 and TRCA-301E were published in The Lancet (March 
2019 and June 2019). A compilation of the clinical evidence that treatment of metabolic acidosis slows CKD progression 
was published in Current Opinion in Nephrology and Hypertension (Goraya and Wesson, 2019) and a meta-analysis of 
the effects of treatment of metabolic acidosis in CKD was published in the Clinical Journal of the American Society of 
Nephrology, or CJASN (Navaneethan et al., 2019). A critical assessment of the data related to clinical effects of sodium 
from sodium chloride versus sodium bicarbonate in patients with CKD-induced metabolic acidosis was published in the 
American Journal of Kidney Diseases, or AJKD (Bushinsky, 2019). A review of the mechanisms underlying metabolic 
acidosis-induced kidney damage in CKD was published in the Journal of American Society of Nephrology, or JASN 
(Wesson et al., 2020). Six presentations reporting veverimer mechanism of action and clinical data as well as health 
economics and clinical outcomes research related to metabolic acidosis were reported at the 2019 ASN Kidney Week 
Meeting. 

Manufacturing

Veverimer drug substance is a room-temperature stable, free flowing powder, composed of low-swelling, polymeric 

beads, approximately 100 micrometers in diameter. As a non-absorbed polymeric drug, veverimer is designed to be 
insoluble in water and organic solvents, and is characterized by its desired function, including high hydrochloric acid 

24

binding capacity and selectivity, and physical properties, such as minimal swelling. Characterization of the isolated 
intermediate and careful control of each process step define the structure of the polymer. Because the process to 
manufacture veverimer fundamentally defines the key polymer attributes for safety and efficacy, the process has been 
carefully monitored and optimized during scale-up.

Veverimer is manufactured using an efficient two-step process. This two-step approach enables, in step one, the 
preparation of a crosslinked polymer having a high binding capacity, and in step two, further crosslinking for low swelling 
and selectivity for hydrochloric acid binding.

The resulting veverimer drug substance is converted into drug product by filling it into packets without the addition 

of excipients. Veverimer drug product is stored at room temperature. Stability studies demonstrated that veverimer is 
stable at room temperature for at least 12 months, and we are conducting registration stability studies that we anticipate 
will enable us to indicate on our label, if approved, that veverimer is stable at room temperature for up to 24 months.

We contract with third-party service providers to manufacture veverimer drug substance and veverimer drug product 

and to perform analytical testing services. We currently have no manufacturing facilities and limited personnel with 
manufacturing experience. We developed the process to manufacture veverimer drug substance in-house and have 
successfully transferred it to three manufacturers. We believe that there are a limited number of experienced contract 
manufacturers in the world capable of manufacturing a polymeric drug substance such as veverimer. We currently rely 
on Patheon Austria GmbH & Co KG, or Patheon, a subsidiary of Thermo Fisher Scientific, Inc., as our sole supplier for 
drug substance manufacturing and we have used two suppliers for drug product manufacturing. We entered into a multi-
year Manufacturing and Commercial Supply Agreement with Patheon in October 2019. Patheon has agreed to 
manufacture and supply us with veverimer to support our commercialization efforts and clinical needs. We intend to 
initially commercialize with a single supplier for drug substance and a single supplier for drug product. Our business 
plan assumes that we will establish a regionally diverse and volume-appropriate portfolio of third-party manufacturers to 
reduce our dependency on single suppliers for drug substance and drug product in the future. We plan to continue to 
rely upon contract manufacturers and suppliers of raw materials for the commercial manufacture of veverimer if it is 
approved by regulatory authorities.

We are validating the veverimer drug substance manufacturing process at Patheon to produce veverimer in a batch 

size of approximately 700 kg. In addition, we have manufactured sufficient amounts of drug substance to support our 
confirmatory post marketing trial, VALOR-CKD, for the next 12 months and to support the anticipated commercial 
demands for veverimer for the next 12 months, if approved. 

Polymeric-based drugs like veverimer generally require large quantities of drug substance, as compared to small 

molecule drugs. Accordingly, we will require larger scale and/or multiple manufacturers of drug substance and drug 
product in order to manufacture sufficient quantities of veverimer to meet our anticipated market demand. We believe 
that our current production process can be optimized to meet our anticipated commercial needs without introducing 
changes to key veverimer properties, including binding capacity, selectivity for hydrochloric acid and non-absorption. 
We use acid binding, competitive anion binding and particle size measurement assays to confirm these properties. The 
scale of the first step in our drug substance manufacturing process, step one, is approximately 640 kg, and the scale of 
the second step in our drug substance manufacturing process, step two, is approximately 700 kg. We are continuing to 
work with our current manufacturer to further optimize and scale our drug substance manufacturing process with the 
intention of achieving additional manufacturing capacity as well as working to secure a second manufacturer of drug 
substance. 

Our third-party service providers, their facilities and the veverimer used in our clinical trials or for commercial sale 
are required to be in compliance with current Good Manufacturing Practices, or cGMP. The cGMP regulations include 
requirements relating to organization of personnel, buildings and facilities, equipment, control of components and 
packaging containers and closures, production and process controls, packaging and labeling controls, holding and 
distribution, laboratory controls, records and reports, and returned or salvaged products. The facilities manufacturing 
and testing our products must meet cGMP requirements and satisfy FDA or other authorities before any product is 
approved and before we can manufacture commercial products. Our third-party manufacturers are also subject to 
periodic inspections of facilities by the FDA and other authorities, including procedures and operations used in the 
testing and manufacture of veverimer to assess compliance with applicable regulations. Failure to comply with statutory 
and regulatory requirements subjects a manufacturer to possible legal or regulatory action, including warning letters, the 
seizure or recall of products, injunctions, consent decrees placing significant restrictions on or suspending 
manufacturing operations and civil and criminal penalties. These actions could have a material impact on the availability 
of veverimer. Contract manufacturers at times encounter difficulties involving production yields, quality control and 
quality assurance, as well as shortages of qualified personnel.

25

Intellectual Property

Our commercial success depends in part on our ability to obtain and maintain proprietary protection for our drug 

candidates, manufacturing and process discoveries, and other know-how, to operate without infringing the proprietary 
rights of others and to prevent others from infringing our proprietary rights. Our policy is to seek to protect our 
proprietary position by, among other methods, filing U.S. and foreign patent applications related to our proprietary 
technology, inventions and improvements that are important to the development and implementation of our business. 
We also rely on trade secrets, know-how, continuing technological innovation, trademark protection and potential in-
licensing opportunities to develop and maintain our proprietary position.

Veverimer was discovered by us utilizing our proprietary technology. We have filed several non-provisional and 
provisional patent applications, all owned by us, relating to veverimer in the United States, certain foreign countries, and 
the World Intellectual Property Organization that are directed to compositions-of-matter, dosage unit forms, methods-of-
treatment, medical use, and methods of manufacture.

Our patent portfolio, which is solely owned by us, includes two issued U.S. composition of matter patents (U.S. 

Patent No. 9,205,107 B2 and No. 9,925,214 B2), four issued U.S. method of treatment patents (U.S. Patent Nos. 
9,993,500 B2, 10,391,118 B2, 10,363,268 B2, and 10,369,169 B1), an issued Australian medical use patent (AU 
2014274817 B2), an issued Australian composition of matter patent (AU 2019219800 B1), an issued European medical 
use patent (EP3 003 327 B1), an issued European composition of matter patent (EP3 287 133 B1), an issued European 
method of manufacture patent (EP3 229 816 B1), an issued Mexican medical use patent (MX 364785 B), an issued 
Hong Kong medical use patent (HK 1223288 A1) and an issued Japanese medical use patent (JP6,453,860 B2). Each 
of these issued patents is expected to expire in 2034 (with the exception of EP3 229 816 B1, which is expected to 
expire in 2035), excluding any additional term resulting from patent term extension if the appropriate maintenance fees 
are paid.

In addition, we solely own other patent applications relating to veverimer (for example, composition of matter, 
dosage unit form, method-of-treatment, medical use and method of manufacture patent applications, where applicable) 
that are currently pending in Australia, Brazil, Canada, China, Europe, Hong Kong, India, Israel, Japan, Mexico, 
Republic of Korea, Russia, and the United States. Certain of these patent applications are also pending in Malaysia, 
New Zealand, Singapore, South Africa and Taiwan. These currently pending patent applications, if they mature into 
issued patents in one or more of such jurisdictions, are expected to expire between 2034 and 2038, if the appropriate 
maintenance, renewal, annuity, and other government fees are paid.

Additional patent term for the presently-issued or later-issued patents may be awarded on a jurisdiction-by-

jurisdiction basis. For example, additional patent term for U.S. patents may be awarded as a result of the patent term 
extension provision of the Hatch-Waxman Amendments of 1984, or the Hatch-Waxman Act. In the European Union 
member countries, a supplementary protection certificate, if obtained, provides a maximum five years of market 
exclusivity. In Japan, the term of a patent may be extended by a maximum of five years in certain circumstances. 

Individual patents extend for varying periods depending on the date of filing of the patent application or the date of 
patent issuance and the legal term of patents in the countries in which they are obtained. Generally, patents issued for 
regularly filed applications in the United States are effective for 20 years from the earliest effective filing date. In 
addition, in certain instances, a patent term can be extended to recapture a portion of the USPTO delay in issuing the 
patent as well as a portion of the term effectively lost as a result of the FDA regulatory review period. However, as to the 
FDA component, the restoration period cannot be longer than five years and the total patent term including the 
restoration period must not exceed 14 years following FDA approval. The duration of foreign patents varies in 
accordance with provisions of applicable local law, but typically is also 20 years from the earliest effective filing date. 
The actual protection afforded by a patent varies on a product by product basis, from country to country and depends 
upon many factors, including the type of patent, the scope of its coverage, the availability of regulatory-related 
extensions, the availability of legal remedies in a particular country and the validity and enforceability of the patent.

We also protect our proprietary technology and processes, in part, by confidentiality and invention assignment 
agreements with our employees, consultants, scientific advisors and other contractors. These agreements may be 
breached, and we may not have adequate remedies for any breach. In addition, our trade secrets may otherwise 
become known or be independently discovered by competitors. To the extent that our employees, consultants, scientific 
advisors or other contractors use intellectual property owned by others in their work for us, disputes may arise as to the 
rights in related or resulting know-how and inventions.

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Our commercial success will also depend in part on not infringing the proprietary rights of third parties. It is 
uncertain whether the issuance of any third-party patent would require us to alter our development or commercial 
strategies, alter our drugs or processes, obtain licenses or cease certain activities. Our breach of any license 
agreements or failure to obtain a license to proprietary rights that we may require to develop or commercialize our future 
drugs may have a material adverse impact on us.

Research and Development

We are conducting development activities to support our NDA for veverimer and manufacturing of commercial 
supply of veverimer. We invested $133.0 million, $85.6 million and $35.9 million in research and development for the 
years ended December 31, 2019, 2018 and 2017, respectively. 

Competition

Our industry is highly competitive and subject to rapid and significant technological change. While we believe that 

our development experience, commercialization expertise and scientific knowledge provide us with competitive 
advantages, we may face competition from large pharmaceutical and biotechnology companies, smaller pharmaceutical 
and biotechnology companies, specialty pharmaceutical companies, academic institutions, government agencies and 
research institutions and others.

Many of our competitors may have significantly greater financial, technical and human resources than we have. 
Mergers and acquisitions in the pharmaceutical and biotechnology industries may result in even more resources being 
concentrated among a smaller number of our competitors. Our commercial opportunity could be reduced or eliminated if 
competitors develop or market products or other novel technologies that are more effective, safer or less costly than 
veverimer, or they may obtain regulatory approval for their products more rapidly than we may obtain approval for ours.

There are no therapies approved by the FDA for the chronic treatment of metabolic acidosis, and we are not aware 

of any active clinical development programs other than ours for a treatment in the United States. The FDA has approved 
generic intravenous sodium bicarbonate solutions for the treatment of acute metabolic acidosis which may occur in 
severe renal disease, uncontrolled diabetes, and certain other disorders accompanied by a significant loss of 
bicarbonate; however, those therapies are used for short-term, hospital-based treatments and are not used in clinical 
practice to treat chronic metabolic acidosis. For many nephrologists, first-line management of metabolic acidosis in 
patients with CKD is to recommend a protein-restrictive diet. Retrospective analyses show that 3% to 15.0% of patients 
with metabolic acidosis and CKD use oral alkali supplementation, such as sodium bicarbonate, sodium citrate or, less 
frequently, potassium citrate. These supplements have not been approved by the FDA for the treatment of metabolic 
acidosis.

Government Regulation

Government Regulation and Product Approval

Government authorities in the United States, at the federal, state and local level, and in other countries and 
jurisdictions, including the European Union, extensively regulate, among other things, the research, development, 
testing, manufacture, quality control, approval, packaging, storage, recordkeeping, labeling, advertising, promotion, 
distribution, marketing, postmarketing monitoring and reporting, and import and export of drug products. The processes 
for obtaining regulatory approvals in the United States and in foreign countries and jurisdictions, along with subsequent 
compliance with applicable statutes and regulations and other regulatory authorities, require the expenditure of 
substantial time and financial resources.

FDA Approval Process

In the United States, the Food and Drug Administration, or FDA, regulates drugs under the Federal Food, Drug, and 

Cosmetic Act, or FFDCA, and implementing regulations. These laws and other federal and state statutes and 
regulations, govern, among other things, the research, development, testing, manufacture, storage, recordkeeping, 
approval, labeling, promotion and marketing, distribution, postmarketing monitoring and reporting, sampling, and import 
and export of drug products. The process of obtaining regulatory approvals and the subsequent compliance with 
applicable federal, state, local and foreign statutes and regulations require the expenditure of substantial time and 
financial resources. Failure to comply with applicable U.S. requirements may subject a company to a variety of 
administrative or judicial sanctions, such as clinical hold, FDA refusal to approve pending regulatory applications, 

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warning or untitled letters, product recalls, product seizures, total or partial suspension of production or distribution, 
injunctions, fines, civil penalties, and criminal prosecution.

The process required by the FDA before a drug may be marketed in the United States generally includes the 

following:

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•

•

•

•

completion of nonclinical laboratory tests, animal studies and formulation studies according to Good Laboratory 
Practices, or GLP, or other applicable regulations;

submission to the FDA of an investigational new drug application, or IND, which must become effective before 
human clinical trials may begin in the United States;

performance of adequate and well-controlled human clinical trials according to Good Clinical Practices, or GCP, 
to establish the safety and efficacy of the product candidate for its intended use;

submission to the FDA of a New Drug Application, or NDA, for a new product;

satisfactory completion of an FDA inspection, if conducted, of the facility or facilities where the product 
candidate is manufactured to assess compliance with the FDA’s current Good Manufacturing Practices, or 
cGMP, to assure that the facilities, methods and controls are adequate to preserve the drug product candidate’s 
identity, strength, quality, purity, and potency;

potential FDA inspection of the nonclinical and clinical trial sites;

potential FDA inspection of us and vendors involved in the generation of the data in support of the NDA; and

FDA review and approval of the NDA.

Satisfaction of FDA pre-market approval requirements typically takes many years and the actual time required may 
vary substantially based upon the type, complexity, and novelty of the product candidate or disease. A clinical hold may 
occur at any time during the life of an IND and may affect one or more specific trials or all trials conducted under the 
IND.

Nonclinical tests include laboratory evaluation of the product candidate’s chemistry, formulation, and toxicity, as well 

as animal studies to assess the characteristics and potential safety and efficacy of the product candidate. The conduct 
of the nonclinical tests must comply with federal regulations and requirements, including GLP. The results of nonclinical 
testing are submitted to the FDA as part of an IND along with other information, including information about product 
candidate’s chemistry, manufacturing and controls, and a proposed clinical trial protocol. Long-term nonclinical tests, 
such as animal tests of reproductive toxicity and carcinogenicity, may continue after the IND is submitted. A 30-day 
waiting period after the submission of each IND is required prior to the commencement of clinical testing in humans. If 
the FDA has neither commented on nor questioned the IND within this 30-day period, the clinical trial proposed in the 
IND may begin. Clinical trials involve the administration of the investigational product to healthy volunteers or subjects 
under the supervision of a qualified investigator. Clinical trials must be conducted: (i) in compliance with federal 
regulations; (ii) in compliance with GCP, an international standard meant to protect the rights and health of subjects and 
to define the roles of clinical trial sponsors, administrators, and monitors; as well as (iii) under protocols detailing the 
objectives of the trial, the parameters to be used in monitoring safety, and the effectiveness criteria to be evaluated. 
Each protocol involving testing on U.S. subjects and subsequent protocol amendments must be submitted to the FDA 
as part of the IND.

The FDA may order the temporary or permanent discontinuation of a clinical trial at any time or impose other 
sanctions if it believes that the clinical trial either is not being conducted in accordance with FDA requirements or 
presents an unacceptable risk to the clinical trial subjects. The trial protocol and informed consent information for 
subjects in clinical trials must also be submitted to an ethics committee/institutional review board, or IRB, for approval. 
An ethics committee/IRB may also require the clinical trial at the site to be halted, either temporarily or permanently, for 
failure to comply with the ethics committee/IRB’s requirements, or may impose other conditions. The study sponsor may 
also suspend a clinical trial at any time on various grounds, including a determination that the subjects are being 
exposed to an unacceptable health risk.

Clinical trials to support NDAs for marketing approval are typically conducted in three sequential phases, but the 
phases may overlap. In Phase 1, the initial introduction of the product candidate is usually into healthy human subjects, 
and the product candidate is tested to assess metabolism, pharmacokinetics, pharmacological actions, side effects 

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associated with increasing doses, and, if possible, early evidence on effectiveness. Phase 2 usually involves trials in a 
limited patient population to determine the effectiveness of the product candidate for a particular indication, dosage 
tolerance, and optimal dosage, and to identify common adverse effects and safety risks. If a product candidate 
demonstrates evidence of effectiveness and an acceptable safety profile in Phase 2 evaluations, Phase 3 trials are 
undertaken to obtain additional information about clinical efficacy and safety in a larger number of subjects, typically at 
geographically dispersed clinical trial sites, to permit the FDA to evaluate the overall benefit-risk relationship of the 
product candidate and to provide adequate information for the labeling of the product candidate. In most cases, the FDA 
requires two adequate and well-controlled Phase 3 clinical trials to demonstrate the efficacy of the product candidate. A 
single Phase 3 trial may be sufficient in certain circumstances.

A drug product candidate being studied in clinical trials may be made available for treatment of individual patients, 

in certain circumstances. Pursuant to the 21st Century Cures Act, or Cures Act, which was signed into law in December 
2016, the manufacturer of an investigational product for a serious disease or condition is required to make available, 
such as by posting on its website, its policy on evaluating and responding to requests for individual patient access to 
such investigational product.

During the development of a new product candidate, sponsors are given opportunities to meet with the FDA at 
certain points; specifically, prior to the submission of an IND, at the end of Phase 2 and before an NDA is submitted. 
Meetings at other times may be requested. These meetings can provide an opportunity for the sponsor to share 
information about the data gathered to date and for the FDA to provide advice on the next phase of development. 
Sponsors typically use the meeting at the end of Phase 2 to discuss their Phase 2 clinical results and present their plans 
for the pivotal Phase 3 clinical trials that they believe will support the approval of the new product candidate.

Concurrent with clinical trials, sponsors usually complete additional animal safety studies and also develop 

additional information about the chemistry and physical characteristics of the product candidate and finalize a process 
for manufacturing commercial quantities of the product candidate in accordance with cGMP requirements. The 
manufacturing process must be capable of consistently producing quality batches of the product candidate and the 
manufacturer must develop methods for testing the quality, purity and potency of the product candidate. Additionally, 
appropriate packaging must be selected and tested and stability studies must be conducted to demonstrate that the 
product candidate does not undergo unacceptable deterioration over its proposed shelf life. After completion of the 
required clinical testing, an NDA is prepared and submitted to the FDA. FDA approval of the NDA is required before 
marketing of the product may begin in the United States. The NDA must include the results of all nonclinical, clinical, 
and other testing and a compilation of data relating to the product candidate’s pharmacology, chemistry, manufacture, 
and controls. The cost of preparing and submitting an NDA is substantial. The submission of most NDAs is additionally 
subject to a substantial application user fee, and the applicant under an approved NDA is also subject to annual 
prescription drug program fees. These fees are typically increased annually. On August 3, 2017, Congress passed the 
FDA Reauthorization Act of 2017, or FDARA, which reauthorizes the various user fees to facilitate the FDA’s product 
review and oversight.

The FDA has 60 days from its receipt of an NDA to determine whether the application will be accepted for filing 
based on the agency’s threshold determination that it is sufficiently complete to permit substantive review. The FDA 
may refuse to file any NDA that it deems incomplete or not properly reviewable at the time of submission and may 
request additional information. In this event, the NDA must be resubmitted with the additional information and the 
resubmitted application also is subject to review before the FDA accepts it for filing. Once the submission is accepted 
for filing, the FDA begins an in-depth review. The FDA has agreed to certain performance goals in the review of NDAs. 
Most such applications for standard review product candidates are reviewed within ten months of the date the FDA files 
the NDA; most applications for priority review product candidates are reviewed within six months of the date the FDA 
files the NDA. Priority review can be applied to a product candidate that the FDA determines has the potential to treat a 
serious or life-threatening condition and, if approved, would be a significant improvement in safety or effectiveness 
compared to available therapies. The review process for both standard and priority review may be extended by the FDA 
for three additional months to consider certain late-submitted information, or information intended to clarify information 
already provided in the submission. This late-submitted information is typically requested by FDA.

Among other things, the FDA reviews an NDA to determine whether the product is safe and effective for its intended 

use and whether the product candidate is being manufactured in accordance with cGMP. The FDA may also refer 
applications for novel product candidates, or product candidates that present difficult questions of safety or efficacy, to 
an advisory committee, typically a panel that includes clinicians and other experts for review, evaluation, and a 
recommendation as to whether the application should be approved. The FDA is not bound by the recommendation of an 
advisory committee, but it generally follows such recommendations.

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Before approving an NDA, the FDA will typically inspect one or more clinical sites to assure compliance with GCP. 
Additionally, the FDA may inspect the facility or the facilities at which the product candidate is manufactured. The FDA 
will not approve the product candidate unless it determines that the manufacturing processes and facilities are in 
compliance with cGMP requirements and adequate to assure consistent production of the product within required 
specifications. To assure GCP and cGMP compliance, an applicant must incur significant expenditures of time, money 
and effort in the areas of training, record keeping, production, and quality control.

Notwithstanding the submission of relevant data and information, the FDA may ultimately decide that the NDA does 

not satisfy the criteria for approval and deny approval. Data obtained from clinical trials are not always conclusive. The 
FDA may disagree with our trial design or interpret data from nonclinical studies and clinical trials differently than we 
interpret the same data. If the agency decides not to approve the NDA in its present form, the FDA will issue a complete 
response letter that describes all of the specific deficiencies in the application identified by the FDA. The deficiencies 
identified may be minor, for example, requiring labeling changes, or major, for example, requiring additional clinical 
trials. If a complete response letter is issued, the applicant may either resubmit the NDA, addressing the deficiencies 
identified in the letter, or withdraw the application. If, or when, those deficiencies have been addressed to the FDA’s 
satisfaction in a resubmission of the NDA, the FDA will issue an approval letter. The FDA has committed to reviewing 
such resubmissions in two or six months depending on the type of information included. An approval letter authorizes 
commercial marketing of the drug in the United States with specific prescribing information for specific indications.

Even if a product candidate receives regulatory approval, the approval may be significantly limited to specific 

indications and dosages or the indications for use may otherwise be limited, which could restrict the commercial value of 
the product. Further, the FDA may require that certain contraindications, warnings or precautions be included in the 
product labeling. The FDA may impose restrictions and conditions on product distribution, prescribing, or dispensing in 
the form of a risk evaluation and mitigation strategy, or REMS, or otherwise limit the scope of any approval. REMS can 
include medication guides, communication plans for healthcare professionals, and elements to assure safe use, or 
ETASU. ETASU can include, but are not limited to, special training or certification for prescribing or dispensing, 
dispensing only under certain circumstances, special monitoring, and the use of patient registries. The requirement for a 
REMS can materially affect the potential market and profitability of the product. In addition, the FDA may require 
confirmatory postmarketing trials, sometimes referred to as “Phase 4” clinical trials, designed to further assess a 
product’s safety and effectiveness, and testing and surveillance programs to monitor the safety of approved products 
that have been commercialized.

Foreign Clinical Studies to Support an IND or NDA

The FDA will accept as support for an IND or NDA a well-designed, well-conducted, non-IND foreign clinical trial if it 

was conducted in accordance with GCP and the FDA is able to validate the data from the trial through an on-site 
inspection, if necessary. A sponsor or applicant who wishes to rely on a non-IND foreign clinical trial must submit 
supporting information to the FDA to demonstrate that the trial conformed to GCP.

Regulatory applications based solely on foreign clinical data meeting these criteria may be approved if the foreign 

data are applicable to the U.S. population and U.S. medical practice, the trials have been performed by clinical 
investigators of recognized competence, and the data may be considered valid without the need for an on-site 
inspection by FDA or, if FDA considers such an inspection to be necessary, FDA is able to validate the data through an 
on-site inspection or other appropriate means. Failure of an application to meet any of these criteria may result in the 
application not being approvable based on the foreign data alone.

Disclosure of Clinical Trial Information

Sponsors of clinical trials of FDA-regulated products are required to register and disclose certain clinical trial 
information. Information related to the product, patient population, phase of investigation, trial sites and investigators, 
and other aspects of the clinical trial is then made public as part of the registration. Sponsors are also obligated to 
disclose the results of their clinical trials after completion. Disclosure of the results of these trials can be delayed in 
certain circumstances for up to two years after the date of completion of the trial. Competitors may use this publicly 
available information to gain knowledge regarding the progress of development programs.

Expedited Development and Review Programs

The FDA has various programs, including Fast Track Designation, Priority Review Designation, Accelerated 
Approval Program and Breakthrough Therapy Designation, which are intended to expedite or simplify the process for 
reviewing product candidates. Even if a product candidate qualifies for one or more of these programs, the FDA may 

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later decide that the product candidate no longer meets the conditions for qualification or that the time period for FDA 
review or approval will be lengthened. Generally, product candidates that are eligible for these programs are those for 
serious or life-threatening conditions, those with the potential to address unmet medical needs and those that offer 
meaningful benefits over existing treatments. For example, Fast Track Designation is a process designed to facilitate 
the development and expedite the review of product candidates to treat serious or life-threatening diseases or 
conditions and fill unmet medical needs. Priority Review Designation is designed to give a product candidate that treats 
a serious condition and, if approved, would provide a significant improvement in safety or effectiveness, an initial review 
within six months as compared to a standard review time of within ten months of the date the FDA files the NDA.

Although Fast Track Designation and Priority Review Designation do not affect the standards for approval, the FDA 

will attempt to facilitate early and frequent meetings with a sponsor of a Fast Track Designation product candidate and 
expedite review of the application for a Priority Review Designation product candidate.

In the Food and Drug Administration Safety and Innovation Act, or FDASIA, which was signed into law in July 2012, 

the U.S. Congress encouraged the FDA to utilize innovative and flexible approaches to the assessment of product 
candidates under the Accelerated Approval Program. The law required the FDA to issue related guidance and also 
promulgate confirming regulatory changes. In May 2014, the FDA published a final Guidance for Industry titled 
“Expedited Programs for Serious Conditions-Drugs and Biologics,” which provides guidance on the FDA programs that 
are intended to facilitate and expedite development and review of new product candidates as well as threshold criteria 
generally applicable to concluding that a product candidate is a candidate for these expedited development and review 
programs.

In addition to the Fast Track Designation and Priority Review Designation Programs discussed above, the FDA also 

provided guidance on a new program for Breakthrough Therapy Designation, established by FDASIA to subject a new 
category of product candidates to expedited approval. A sponsor may seek Breakthrough Therapy Designation of a 
product candidate if the product candidate is intended, alone or in combination with one or more other therapeutics, to 
treat a serious or life-threatening disease or condition, and preliminary clinical evidence indicates that the product 
candidate may demonstrate substantial improvement over existing therapies on one or more clinically significant 
endpoints, such as substantial treatment effects observed early in clinical development. A request for Breakthrough 
Therapy Designation should be submitted concurrently with, or as an amendment to, an IND, but ideally no later than 
the End-of-Phase 2 meeting.

Accelerated Approval Program

Under the accelerated approval provisions of the FFDCA and the FDA’s implementing regulations, the FDA may 
grant accelerated approval to a product for a serious or life-threatening disease or condition that provides meaningful 
therapeutic advantage to patients over existing treatments based upon a determination that the product has an effect on 
a surrogate endpoint that is reasonably likely to predict clinical benefit. Products approved through the Accelerated 
Approval Program must meet the same statutory standards for safety and effectiveness as those granted traditional 
approval.

The Accelerated Approval Program is most often used in settings in which the course of a disease is long and an 

extended period of time is required to measure the intended clinical benefit of a product, while the effect on the 
surrogate endpoint occurs more rapidly. The FDA will not grant approval through the Accelerated Approval Program to 
products that meet standards for traditional approval.

The evidence to support the determination that an endpoint is reasonably likely to predict clinical benefit may 

include epidemiological, pathophysiological, therapeutic, pharmacologic, or other evidence developed using biomarkers, 
for example, or other scientific methods or tools. The FDA considers all relevant evidence and may consult external 
experts, as needed. Important factors for the agency’s consideration include the disease process and the relationship 
between the drug’s effect and the disease process.

Approval through the Accelerated Approval Program is subject, however, to the requirement that the applicant 

conduct additional postmarketing clinical trials to verify and describe the drug’s clinical benefit, where there is 
uncertainty as to the relationship of the surrogate endpoint to the clinical benefit, or of the observed clinical endpoint to 
ultimate outcome. Typically, clinical benefit is verified when postmarketing clinical trials show that the drug provides a 
clinically meaningful positive therapeutic effect, that is, an effect on how a patient feels, functions, or survives. The FDA 
may require that any confirmatory postmarketing trial be initiated or substantially underway prior to the submission of an 
application through the Accelerated Approval Program. And, if such confirmatory postmarketing trial fails to confirm the 
drug’s clinical profile or risks and benefits, the FDA may withdraw its approval of the drug. The FDA may also withdraw 

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the approval if other evidence demonstrates that the product is not safe or effective. All promotional materials for 
product candidates approved through the Accelerated Approval Program are subject to prior review by the FDA. The 
FDA has issued labeling instructions specific to the program. For example, if a drug is approved based on a surrogate 
endpoint through the program, its labeling should include a succinct description of the limitations of usefulness of the 
drug and any uncertainty about anticipated clinical benefits. False or misleading promotional materials may also lead to 
expedited withdrawal of approval.

Patent Term Restoration and Marketing Exclusivity

After approval, owners of relevant drug patents may apply for up to a five-year patent extension under the Drug 
Price Competition and Patent Term Restoration Act of 1984, referred to as the Hatch- Waxman Act. The allowable 
patent term extension is calculated as half of the product’s testing phase-the time between IND and NDA submission-
and all of the review phase-the time between NDA submission and approval, up to a maximum of five years. The time 
can be shortened if the FDA determines that the applicant did not pursue approval with due diligence. The total patent 
term after the extension may not exceed 14 years.

For patents that might expire during the application phase, the patent owner may request an interim patent 

extension. An interim patent extension increases the patent term by one year and may be renewed up to four times. For 
each interim patent extension granted, the post-approval patent extension is reduced by one year. The director of the 
U.S. Patent and Trademark Office must determine that approval of the product candidate covered by the patent for 
which a patent extension is being sought is likely. Interim patent extensions are not available for a product candidate for 
which an NDA has not been submitted.

Market exclusivity provisions under the FFDCA also can delay the submission or the approval of certain 

applications. The FFDCA provides a five-year period of non-patent marketing exclusivity within the United States to the 
first applicant to gain approval of an NDA for a new chemical entity. A product candidate is a new chemical entity if the 
FDA has not previously approved any other new product candidate containing the same active moiety, which is the 
molecule or ion responsible for the action of the product candidate substance. During the exclusivity period, the FDA 
may not accept for review an abbreviated new drug application, or ANDA, or a 505(b)(2) NDA submitted by another 
company for another version of such product candidate where the applicant does not own or have a legal right of 
reference to all the data required for approval. However, an application may be submitted after four years if it contains a 
certification of patent invalidity or non-infringement. The FFDCA also provides three years of marketing exclusivity for an 
NDA, 505(b)(2) NDA or supplement to an approved NDA if new clinical investigations, other than bioavailability studies, 
that were conducted or sponsored by the applicant are deemed by the FDA to be essential to the approval of the 
application, for example, for new indications, dosages or strengths of an existing product candidate. This three-year 
exclusivity covers only the conditions associated with the new clinical investigations and does not prohibit the FDA from 
approving ANDAs for product candidates containing the original active agent. Five-year and three-year exclusivity will 
not delay the submission or approval of a full NDA. However, an applicant submitting a full NDA would be required to 
conduct or obtain a right of reference to all of the nonclinical studies and adequate and well-controlled clinical trials 
necessary to demonstrate safety and effectiveness.

Postmarketing Requirements

Once an approval is granted, the FDA may withdraw the approval if compliance with regulatory requirements is not 
maintained or if problems occur after the product reaches the market. Later discovery of previously unknown problems 
with a product may result in restrictions on the product or even complete withdrawal of the product from the market. 
After approval, some types of changes to the approved product, such as adding new indications, manufacturing 
changes and additional labeling claims, are subject to further FDA review and approval. In addition, the FDA may under 
some circumstances require testing and surveillance programs to monitor the effect of approved products that have 
been commercialized, and the FDA under some circumstances has the power to prevent or limit further marketing of a 
product based on the results of these postmarketing programs.

Veverimer, which will be manufactured or distributed by us or our collaborators pursuant to FDA approvals, is 

subject to continuing regulation by the FDA, including, among other things:

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record-keeping requirements;

reporting of adverse experiences associated with the product;

providing the FDA with updated safety and efficacy information;

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therapeutic sampling and distribution requirements;

notifying the FDA and gaining its approval of specified manufacturing or labeling changes;

registration and listing requirements; and

complying with FDA promotion and advertising requirements, which include, among other things, standards for 
direct-to-consumer advertising, restrictions on promoting products for uses or in patient populations that are not 
described in the product’s approved labeling, limitations on industry-sponsored scientific and educational 
activities and requirements for promotional activities involving the internet.

Manufacturers, their subcontractors, and other entities involved in the manufacture and distribution of veverimer, if 

approved, are required to register their establishments with the FDA and certain state agencies and are subject to 
periodic unannounced inspections by the FDA and some state agencies for compliance with cGMP, including data 
integrity requirements, and other laws. The FDA periodically inspects manufacturing facilities to assess compliance with 
ongoing regulatory requirements, including cGMP, which impose extensive procedural, substantive and record-keeping 
requirements upon us and third-party manufacturers engaged by us if veverimer is approved. In addition, changes to the 
manufacturing process are strictly regulated, and, depending on the significance of the change, may require FDA 
approval before being implemented. FDA regulations would also require investigation and correction of any deviations 
from cGMP and impose reporting and documentation requirements upon us and our third-party manufacturers. 
Accordingly, manufacturers must continue to expend time, money and effort in the area of production and quality control 
to maintain compliance with cGMP and other aspects of regulatory compliance. Failure to comply with the statutory and 
regulatory requirements can subject a manufacturer to possible legal or regulatory actions, such as warning letters, 
suspension of manufacturing, seizures of products, injunctive actions or other civil penalties.

In addition, drug manufacturers in the United States must comply with applicable provisions of the Drug Supply 
Chain Security Act and provide and receive product tracing information, maintain appropriate licenses, ensure they only 
work with other properly licensed entities, and have procedures in place to identify and properly handle suspect and 
illegitimate product.

New Legislation and Regulations

From time to time, legislation is drafted, introduced and passed in Congress that could significantly change the 
statutory provisions governing the testing, approval, manufacturing and marketing of products regulated by the FDA. In 
addition to new legislation, FDA regulations and policies are often revised or interpreted by the agency in ways that may 
significantly affect our business and veverimer. It is impossible to predict whether further legislative changes will be 
enacted or whether FDA regulations, guidance, policies or interpretations will be changed or what the effect of such 
changes, if any, may be.

Other U.S. Healthcare Laws and Compliance Requirements

In the United States, our activities are potentially subject to regulation by various federal, state and local authorities 

in addition to the FDA, including but not limited to, the Centers for Medicare and Medicaid Services, or CMS, other 
divisions of the U.S. Department of Health and Human Services (such as the Office of Inspector General and the Health 
Resources and Service Administration), the U.S. Department of Justice, or the DOJ, and individual U.S. Attorney offices 
within the DOJ, and state and local governments. For example, sales, marketing and scientific/educational grant 
programs may have to comply with the federal Anti-Kickback Statute, the federal False Claims Act, or FCA, the privacy 
and security provisions of the Health Insurance Portability and Accountability Act, or HIPAA, and similar state laws, 
each as amended, as applicable.

The federal Anti-Kickback Statute prohibits, among other things, any person or entity, from knowingly and willfully 
offering, paying, soliciting or receiving any remuneration, directly or indirectly, overtly or covertly, in cash or in kind, to 
induce or in return for purchasing, leasing, ordering, recommending or arranging for the purchase, lease or order of any 
item or service reimbursable, in whole or in part, under Medicare, Medicaid or other federal healthcare programs. The 
term remuneration has been interpreted broadly to include anything of value. The federal Anti-Kickback Statute has 
been interpreted to apply to arrangements between therapeutic product manufacturers on one hand and prescribers, 
purchasers, formulary managers, and anyone in a position to purchase or recommend the product on the other. There 
are a number of statutory exceptions and regulatory safe harbors protecting some common activities from prosecution. 
The exceptions and safe harbors are drawn narrowly and practices that involve remuneration that may be alleged to be 
intended to induce prescribing, purchasing, ordering or recommending may be subject to scrutiny if they do not qualify 

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for an exception or safe harbor. Failure to meet all of the requirements of a particular applicable statutory exception or 
regulatory safe harbor does not make the conduct per se illegal under the Anti-Kickback Statute. Instead, the legality of 
the arrangement will be evaluated on a case-by-case basis based on a cumulative review of all of its facts and 
circumstances. Our practices may not in all cases meet all of the criteria for protection under a statutory exception or 
regulatory safe harbor.

Additionally, the intent standard under the federal Anti-Kickback Statute was amended by the Patient Protection and 

Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010, or the PPACA , to a 
stricter standard such that a person or entity no longer needs to have actual knowledge of the statute or specific intent 
to violate it in order to have committed a violation. In addition, the PPACA codified case law that a claim including items 
or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for 
purposes of the FCA (discussed below).

The federal false claims and civil monetary penalty laws, including the FCA, which imposes significant penalties and 
can be enforced by private citizens through civil qui tam actions, prohibit any person or entity from, among other things, 
knowingly presenting, or causing to be presented, a false or fraudulent claim for payment to, or approval by, the federal 
healthcare programs, including Medicare and Medicaid, or knowingly making, using, or causing to be made or used a 
false record or statement material to a false or fraudulent claim to the federal government. A claim includes “any request 
or demand” for money or property presented to the U.S. government. For instance, historically, pharmaceutical and 
other healthcare companies have been prosecuted under these laws for allegedly providing free product to customers 
with the expectation that the customers would bill federal programs for the product. Other companies have been 
prosecuted for causing false claims to be submitted because of the companies’ marketing of the product for 
unapproved, off-label, and thus generally non-reimbursable, uses.

HIPAA created additional federal criminal statutes that prohibit, among other things, knowingly and willfully 
executing, or attempting to execute, a scheme to defraud or to obtain, by means of false or fraudulent pretenses, 
representations or promises, any money or property owned by, or under the control or custody of, any healthcare 
benefit program, including private third-party payers, willfully obstructing a criminal investigation of a healthcare offense, 
and knowingly and willfully falsifying, concealing or covering up by trick, scheme or device, a material fact or making any 
materially false, fictitious or fraudulent statement in connection with the delivery of or payment for healthcare benefits, 
items or services. Like the federal Anti-Kickback Statute, the PPACA amended the intent standard for certain healthcare 
fraud statutes under HIPAA such that a person or entity no longer needs to have actual knowledge of the statute or 
specific intent to violate it in order to have committed a violation.

Also, many states have similar, and typically more prohibitive, fraud and abuse statutes or regulations that apply to 
items and services reimbursed under Medicaid and other state programs, or, in several states, apply regardless of the 
payer. Additionally, to the extent that veverimer may in the future be sold in a foreign country, we may be subject to 
similar foreign laws.

We may be subject to data privacy and security regulations by both the federal government and the states in which 
we conduct our business. HIPAA, as amended by the Health Information Technology for Economic and Clinical Health 
Act, or HITECH, and its implementing regulations, imposes requirements relating to the privacy, security and 
transmission of individually identifiable health information. Among other things, HITECH makes HIPAA’s privacy and 
security standards directly applicable to business associates, independent contractors, or agents of covered entities that 
receive or obtain protected health information in connection with providing a service on behalf of a covered entity. 
HITECH also created four tiers of civil monetary penalties, amended HIPAA to make civil and criminal penalties directly 
applicable to business associates, and gave state attorneys general new authority to file civil actions for damages or 
injunctions in federal courts to enforce HIPAA and seek attorneys’ fees and costs associated with pursuing federal civil 
actions. In addition, many state laws govern the privacy and security of health information in specified circumstances, 
many of which differ from each other in significant ways, are often not pre-empted by HIPAA, and may have a more 
prohibitive effect than HIPAA, thus complicating compliance efforts.

We expect that veverimer, if approved, may be eligible for coverage under Medicare, the federal health care 

program that provides health care benefits to the aged and disabled, and covers outpatient services and supplies, 
including certain pharmaceutical products, that are medically necessary to treat a beneficiary’s health condition. In 
addition, veverimer may be covered and reimbursed under other government programs, such as Medicaid and the 340B 
Drug Pricing Program. The Medicaid Drug Rebate Program requires pharmaceutical manufacturers to enter into and 
have in effect a national rebate agreement with the Secretary of the Department of Health and Human Services as a 
condition for states to receive federal matching funds for the manufacturer’s outpatient drugs furnished to Medicaid 
patients. Under the 340B Drug Pricing Program, the manufacturer must extend discounts to entities that participate in 

34

the program. As part of the requirements to participate in these government programs, many pharmaceutical 
manufacturers must calculate and report certain price reporting metrics to the government, such as average 
manufacturer price, or AMP, and best price. There are penalties for failing to provide timely and accurate price reporting 
to the government, and the Right Rebate Act (effective April 2019) imposes additional penalties for knowingly 
misclassifying a covered outpatient drug under the Medicaid Drug Rebate Program.

Additionally, the federal Physician Payments Sunshine Act, or the Sunshine Act, within the PPACA, and its 
implementing regulations, require that certain manufacturers of drugs, devices, biological and medical supplies for 
which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program (with certain 
exceptions) report annually to CMS information related to certain payments or other transfers of value made or 
distributed to "Covered Recipients", or to entities or individuals at the request of, or designated on behalf of, Covered 
Recipients and to report annually certain ownership and investment interests held by physicians and their immediate 
family members. The term Covered Recipients currently includes U.S.-licensed-physicians and teaching hospitals, and, 
for reports submitted on or after January 1, 2022, physician assistants, nurse practitioners, clinical nurse specialists, 
certified nurse anesthetists, and certified nurse-midwives. In addition, many states also govern the reporting of 
payments or other transfers of value, many of which differ from each other in significant ways, are often not pre-empted, 
and may have a more prohibitive effect than the Sunshine Act, thus further complicating compliance efforts.

In order to distribute products commercially, we must comply with state laws that require the registration of 
manufacturers and wholesale distributors of drug and biological products in a state, including, in certain states, 
manufacturers and distributors who ship products into the state even if such manufacturers or distributors have no place 
of business within the state. Some states also impose requirements on manufacturers and distributors to establish the 
pedigree of product in the chain of distribution, including some states that require manufacturers and others to adopt 
new technology capable of tracking and tracing product as it moves through the distribution chain. Several states have 
enacted legislation requiring pharmaceutical and biotechnology companies to establish marketing compliance 
programs, file periodic reports with the state, make periodic public disclosures on sales, marketing, pricing, clinical trials 
and other activities, and/or register their sales representatives, as well as to prohibit pharmacies and other healthcare 
entities from providing certain physician prescribing data to pharmaceutical and biotechnology companies for use in 
sales and marketing, and to prohibit certain other sales and marketing practices. All of our activities are potentially 
subject to federal and state consumer protection and unfair competition laws.

Ensuring business arrangements with third parties comply with applicable healthcare laws and regulations is a 
costly endeavor. If our operations are found to be in violation of any of the federal and state healthcare laws described 
above or any other current or future governmental regulations that apply to us, we may be subject to penalties, including 
without limitation, civil, criminal and/or administrative penalties, damages, fines, disgorgement, individual imprisonment, 
exclusion from participation in government programs, such as Medicare and Medicaid, injunctions, private “qui tam” 
actions brought by individual whistleblowers in the name of the government, or refusal to allow us to enter into 
government contracts, contractual damages, reputational harm, administrative burdens, diminished profits and future 
earnings, additional reporting obligations and oversight if we become subject to a corporate integrity agreement or other 
agreement to resolve allegations of non-compliance with these laws, and the curtailment or restructuring of our 
operations, any of which could adversely affect our ability to operate our business and our results of operations.

Coverage, Pricing and Reimbursement

Significant uncertainty exists as to the coverage and reimbursement status of veverimer, if approved. In the United 
States and in foreign markets, sales of veverimer, if and when we receive regulatory approval for commercial sale, will 
depend, in part, on the extent to which third-party payers provide coverage and establish adequate reimbursement 
levels for such products. In the United States, third-party payers include federal and state healthcare programs, private 
managed care providers, commercial health insurers and other organizations. Adequate coverage and reimbursement 
from governmental healthcare programs, such as Medicare and Medicaid in the United States, and commercial payers 
are critical to new product acceptance.

Our ability to commercialize veverimer successfully also will depend in part on the extent to which coverage and 

reimbursement for these products and related treatments will be available from government health administration 
authorities, private health insurers and other organizations. Government authorities and third-party payers, such as 
private health insurers and health maintenance organizations, decide which therapeutics they will pay for and establish 
reimbursement levels. Coverage and reimbursement by a third-party payer may depend upon a number of factors, 
including the third-party payer’s determination that use of a therapeutic is:

•

a covered benefit under its health plan;

35

•

•

•

•

safe, effective and medically necessary;

appropriate for the specific patient;

cost-effective; and

neither experimental nor investigational.

We cannot be sure that reimbursement will be available for veverimer and, if coverage and reimbursement are 
available, what the level of reimbursement will be. Coverage may also be more limited than the indications for which the 
product is approved by the FDA or comparable foreign regulatory authorities. Reimbursement may impact the demand 
for, or the price of, veverimer, if approved.

Third-party payers are increasingly challenging the price, examining the medical necessity, and reviewing the cost 
effectiveness of medical products, therapies and services, in addition to questioning their safety and efficacy. Obtaining 
reimbursement for veverimer may be particularly difficult because of the higher prices often associated with branded 
drugs and drugs administered under the supervision of a physician. We may need to conduct expensive 
pharmacoeconomic studies in order to demonstrate the medical necessity and cost effectiveness of veverimer, in 
addition to the costs required to obtain FDA approvals. Veverimer may not be considered medically necessary or cost-
effective. Obtaining coverage and reimbursement approval of a product from a government or other third-party payer is 
a time-consuming and costly process that could require us to provide to each payer supporting scientific, clinical and 
cost-effectiveness data for the use of veverimer on a payer-by-payer basis, with no assurance that coverage and 
adequate reimbursement will be obtained. A payer’s decision to provide coverage for a product does not imply that an 
adequate reimbursement rate will be approved. Further, one payer’s determination to provide coverage for a product 
does not assure that other payers will also provide coverage for the product. Adequate third-party reimbursement may 
not be available to enable us to maintain price levels sufficient to realize an appropriate return on our investment in 
product development. In addition, prices for drugs may be reduced by mandatory discounts or rebates required by 
government healthcare programs or private payers and by any future relaxation of laws that presently restrict imports of 
drugs from countries where they may be sold at lower prices than in the United States. It is difficult to predict how 
Medicare coverage and reimbursement policies will be applied to veverimer in the future and coverage and 
reimbursement under different federal healthcare programs are not always consistent. If reimbursement is not available 
or is available only at limited levels, we may not be able to successfully commercialize veverimer.

Different pricing and reimbursement schemes exist in other countries. In the European Union, governments 
influence the price of pharmaceutical products through their pricing and reimbursement rules and control of national 
health care systems that fund a large part of the cost of those products to consumers. Some jurisdictions operate 
positive and negative list systems under which products may only be marketed once a reimbursement price has been 
agreed. To obtain reimbursement or pricing approval, some of these countries may require the completion of clinical 
trials that compare the cost effectiveness of a particular product candidate to currently available therapies. Other 
member states allow companies to fix their own prices for medicines but monitor and control company profits. The 
downward pressure on health care costs has become intense. As a result, increasingly high barriers are being erected 
to the entry of new products. In addition, in some countries, cross- border imports from low-priced markets exert a 
commercial pressure on pricing within a country.

The marketability of veverimer, if approved, for commercial sale may suffer if the government and third-party payers 
fail to provide adequate coverage and reimbursement. In addition, emphasis on managed care, the increasing influence 
of health maintenance organizations, and additional legislative changes in the United States has increased, and we 
expect will continue to increase, the pressure on healthcare pricing. The downward pressure on the rise in healthcare 
costs in general, particularly prescription medicines, medical devices and surgical procedures and other treatments, has 
become very intense. Coverage policies and third-party reimbursement rates may change at any time. Even if favorable 
coverage and reimbursement status is attained for one or more products for which we receive regulatory approval, less 
favorable coverage policies and reimbursement rates may be implemented in the future.

Healthcare Reform

In the United States and some foreign jurisdictions, there have been, and continue to be, several legislative and 

regulatory changes and proposed changes regarding the healthcare system that could prevent or delay marketing 
approval of product candidates, restrict or regulate post-approval activities, and affect the ability to effectively sell 
product candidates for which marketing approval is obtained. Policy makers and payers in the United States and 
elsewhere, have undertaken efforts to contain healthcare costs, improve quality, and expand patient access to 

36

healthcare items and services. In the United States, the pharmaceutical industry has been a particular focus of these 
efforts and has been significantly affected by major legislative initiatives.

For example, the PPACA substantially changed and continues to impact healthcare financing and delivery by both 

government payers and private insurers. Among the PPACA provisions of importance to the pharmaceutical and 
biotechnology industries, in addition to those otherwise described above, are the following:

•

•

•

•

•

•

•

•

•

•

•

•

•

an annual, nondeductible fee on any entity that manufactures or imports certain specified branded prescription 
drugs and biologic agents apportioned among these entities according to their market share in some 
government healthcare programs that began in 2011;

an increase in the statutory minimum rebates a manufacturer must pay under the Medicaid Drug Rebate 
Program to 23.1% and 13.0% of the average manufacturer price, or AMP, for most branded and generic drugs, 
respectively, and a cap on the total rebate amount for single source and innovator drugs at 100.0% of the 
product's AMP;

the Medicare Part D coverage gap discount program, where as a condition for the manufacturers’ outpatient 
drugs to be covered under Medicare Part D program, manufacturers must agree to offer 70.0% point-of-sale 
discounts off negotiated prices of applicable brand drugs to eligible beneficiaries during their coverage gap 
period;

extension of manufacturers’ Medicaid rebate liability to covered drugs dispensed to individuals who are enrolled 
in Medicaid managed care plans, a new methodology by which rebates owed by manufacturers under the 
Medicaid Drug Rebate Program are calculated for drugs that are inhaled, infused, instilled, implanted, or 
injected;

expansion of the eligibility criteria for Medicaid programs by, among other things, allowing states to offer 
Medicaid coverage to additional individuals and by adding mandatory eligibility categories for individuals with 
income at or below 138.0% of the federal poverty level, thereby potentially increasing manufacturers’ Medicaid 
rebate liability;

expansion of the entities eligible for discounts under the 340B Drug Discount Program;

a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative 
clinical effectiveness research, along with funding for such research;

expansion of healthcare fraud and abuse laws, including the FCA and the Anti-Kickback Statute, new 
government investigative powers, and enhanced penalties for noncompliance;

a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are 
calculated for drugs that are inhaled, infused, instilled, implanted, or injected;

requirements to report certain financial arrangements with physicians and teaching hospitals;

a requirement to annually report certain information regarding drug samples that manufacturers and distributors 
provide to physicians;

establishment of a Center for Medicare Innovation at CMS to test innovative payment and service delivery 
models to lower Medicare and Medicaid spending, potentially including prescription drug spending; and

a licensure framework for follow on biologic products.

There have been legal and judicial, Congressional, and political challenges to certain aspects of the PPACA, as well 

as efforts by the Trump administration to repeal and replace certain aspects of the PPACA. Since January 2017, 
President Trump has signed at least two executive orders and other directives designed to delay, circumvent, or loosen 
certain requirements mandated by the PPACA. While Congress has not passed comprehensive repeal legislation, two 
bills affecting the implementation of certain taxes under the PPACA have been signed into law, including the repeal, 
effective January 1, 2019, of the tax-based shared responsibility payment imposed by the PPACA on certain individuals 
who fail to maintain qualifying health coverage for all or part of a year that is commonly referred to as the “individual 
mandate.” Although two courts have ruled that this repeal renders the individual mandate unconstitutional, this decision 
is subject to further appeal and the courts are continuing to assess whether this means that the PPACA as a whole is 

37

unconstitutional. Additionally, on January 22, 2018, President Trump signed a continuing resolution on appropriations 
for fiscal year 2018 that delayed the implementation of certain PPACA-mandated fees, including the so called “Cadillac” 
tax on certain high cost employer-sponsored insurance plans, the annual fee imposed on certain third-party providers 
based on market share, and the medical device excise tax on nonexempt medical devices. Moreover, the Bipartisan 
Budget Act of 2018 among other things, amended the PPACA, effective January 1, 2019, to increase from 50.0% to 
70.0% the point-of-sale discount to eligible beneficiaries during their coverage gap period that is owed by 
pharmaceutical manufacturers who participate in Medicare Part D and to close the coverage gap in most Medicare drug 
plans, commonly referred to as the “donut hole.” In the future, there may be additional challenges and amendments to 
the PPACA. It remains to be seen precisely what new legislation will provide, when it will be enacted, and what impact it 
will have on the availability of healthcare and containing or lowering the cost of healthcare, including the cost of 
pharmaceutical products. 

We anticipate that the PPACA, if substantially maintained in its current form, will continue to result in additional 
downward pressure on coverage and the price that we receive for veverimer, and could seriously harm our business. 
Any reduction in reimbursement from Medicare and other government programs may result in a similar reduction in 
payments from private payers. The implementation of cost containment measures or other healthcare reforms may 
prevent us from being able to generate revenue, attain profitability, or commercialize veverimer. Such reforms could 
have an adverse effect on anticipated revenue from product candidates that we may successfully develop and for which 
we may obtain regulatory approval and may affect our overall financial condition and ability to develop product 
candidates.

Further legislation or regulation could be passed that could harm our business, financial condition and results of 
operations. Other legislative changes have been proposed and adopted since the PPACA was enacted. For example, in 
August 2011, President Obama signed into law the Budget Control Act of 2011, which, among other things, created the 
Joint Select Committee on Deficit Reduction to recommend legislation that would reduce the deficit by at least $1.5 
trillion, but at a minimum $1.2 trillion, from fiscal years 2012 to 2021. The Joint Select Committee on Deficit Reduction 
did not reach an agreement and, as a result, Congress did not enact a “joint committee bill” with the requisite deficit 
reduction by the law’s deadline, triggering the law’s automatic reductions to several government programs. This 
includes automatic reductions in Medicare payments for all items and services, including prescription drugs, of up to 
2.0% per fiscal year, which went into effect beginning on April 1, 2013 and will stay in effect through 2029 unless 
additional Congressional action is taken.

Additionally, there has been increasing legislative and enforcement interest in the United States with respect to 
specialty drug pricing practices. Specifically, there have been several recent U.S. Congressional inquiries and proposed 
federal legislation designed to, among other things, lower drug pricing, bring more transparency to drug pricing, reduce 
the cost of prescription drugs under Medicare, review the relationship between pricing and manufacturer patient 
programs, and reform government program reimbursement methodologies for drugs. While any proposed measures will 
require authorization through additional legislation to become effective, Congress and the Trump administration have 
each indicated that it will continue to seek new legislative and/or administrative measures to control drug costs. At the 
state level, legislatures are increasingly passing legislation and implementing regulations designed to control 
pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, 
restrictions on certain product access and marketing cost disclosure and transparency measures and, in some cases, 
designed to encourage importation from other countries and bulk purchasing. The implementation of cost containment 
measures or other healthcare reforms may prevent us from being able to generate revenue, attain profitability, or 
commercialize veverimer, if approved.

The Foreign Corrupt Practices Act

The Foreign Corrupt Practices Act, or the FCPA, prohibits any U.S. individual or business from paying, offering, or 

authorizing payment or offering of anything of value, directly or indirectly, to any foreign official, political party or 
candidate for the purpose of influencing any act or decision of the foreign entity in order to assist the individual or 
business in obtaining or retaining business. The FCPA also obligates companies whose securities are listed in the 
United States to comply with accounting provisions requiring us to maintain books and records that accurately and fairly 
reflect all transactions of the corporation, and to devise and maintain an adequate system of internal accounting controls 
for international operations.

Additional Regulation

In addition to the foregoing, state and federal laws regarding environmental protection and hazardous substances, 

including the Occupational Safety and Health Act, the Resource Conservancy and Recovery Act and the Toxic 

38

Substances Control Act, affect our business. These and other laws govern our use, handling and disposal of various 
biological, chemical and radioactive substances used in, and wastes generated by, our operations. If our operations 
result in contamination of the environment or expose individuals to hazardous substances, we could be liable for 
damages and governmental fines. We believe that we are in material compliance with applicable environmental laws 
and that continued compliance therewith will not have a material adverse effect on our business. We cannot predict, 
however, how changes in these laws may affect our future operations.

Other Regulations

We are also subject to numerous federal, state and local laws relating to such matters as safe working conditions, 

manufacturing practices, environmental protection, fire hazard control, and disposal of hazardous or potentially 
hazardous substances. We may incur significant costs to comply with such laws and regulations now or in the future.

European Union/Rest of World Government Regulation

In addition to regulations in the United States, we will be subject to a variety of regulations in other jurisdictions 
governing, among other things, clinical trials, manufacturing and any future commercial sales, promotion and distribution 
of veverimer. Whether or not we obtain FDA approval to market veverimer, we must obtain the requisite approvals from 
regulatory authorities in foreign jurisdictions prior to the commencement of clinical trials or marketing of the products in 
those countries.

Even if a product obtains FDA marketing approval, most foreign jurisdiction require that the investigational product 
undergo national requirements related to clinical trials and authorization processes, similar to those in the United States. 
With respect to clinical trials, certain countries outside of the United States have a similar process that requires the 
submission of a clinical trial application, much like the IND, prior to the commencement of human clinical trials. In the 
European Union, for example, before starting a clinical trial, a valid request for authorization must be submitted by the 
sponsor to the competent authority of the EU Member State(s) in which the sponsor plans to conduct the clinical trial, as 
well as to independent Ethics Committee(s). A clinical trial may commence only once the relevant Ethics Committee(s) 
has (have) issued a favorable opinion and the competent authority of the EU Member State(s) concerned has (have) not 
informed the sponsor of any grounds for non-acceptance. Failure to comply with the EU requirements may subject a 
company to the rejection of the request and the prohibition to start a clinical trial. Clinical trials conducted in the 
European Union (or used for marketing authorization application in the European Union) must be conducted in 
accordance with applicable laws, GCP and GMP rules, International Conference on Harmonization of Technical 
Requirements for Registration of Pharmaceuticals for Human Use, or ICH, guidelines and be consistent with ethical 
principles. Competent authorities of EU Member States regularly conduct GCP inspections to verify the sponsor’s 
compliance with applicable rules. The sponsor is required to record all adverse events which are reported to it by 
investigators and submit, upon request, such records to the EU Member State in which the clinical trial is being 
conducted. The sponsor is also required to record and report to the relevant national competent authorities and to the 
Ethics Committee information about suspected serious unexpected adverse reactions (i) as soon as it becomes aware 
of suspected serious unexpected reactions, and (ii) yearly of all suspected serious unexpected reactions having 
occurred over the past year and to report on the subjects’ safety.

The authorization of a clinical trial may be suspended or revoked by EU Member States in their territory if the 
conditions in the request for an authorization are no longer met, or if an EU Member State has information raising 
doubts about the safety or scientific validity of the clinical trial. Various penalties exist in EU Member States for non-
compliance with the clinical trial rules and related requirements, for example with respect to data protection and privacy. 
If we or our potential collaborators fail to comply with applicable EU regulatory requirements, we may also be subject to 
damage compensation and civil and criminal liability. The way clinical trials are conducted in the European Union will 
undergo a major change when the new EU Clinical Trial Regulation (Regulation 536/2014) comes into application in 
2019.

The way clinical trials are conducted in the European Union will undergo a major change when the new EU Clinical 

Trials Regulation (Regulation 536/2014) comes into application, according to the European Commission currently 
expected in late 2021 or 2022. The new Clinical Trials Regulation is aimed at simplifying and streamlining the approval 
of clinical trials in the EU. The new EU Clinical Trials Regulation aims to simplify and streamline the approval of clinical 
trial in the EU. The main characteristics of the regulation include: a streamlined application procedure via a single entry 
point, the EU portal; a single set of documents to be prepared and submitted for the application as well as simplified 
reporting procedures that will spare sponsors from submitting broadly identical information separately to various bodies 
and different EU Member States. The current regime under the EU Member States’ national legislation implementing 
the Clinical Trials Directive (Directive 2001/20/EC) will, however, still apply three years from the date of entry into 

39

application of the Clinical Trials Regulation to (i) clinical trials applications submitted before the entry into application 
and (ii) clinical trials applications submitted within one year after the entry into application if the sponsor opts for old 
system.

As in the United States, no medicinal product may be placed on the EU market unless a marketing authorization 
has been issued. Medicinal products may be authorized in different ways in the EU, depending on certain criteria: the 
national authorization procedure (i.e., via the EU Member States’ national authorization procedure, which later allows for 
application via the mutual-recognition procedure), the centralized authorization procedure (i.e., at EU level), or the 
decentralized authorization procedure (i.e., authorization of a product that is not yet authorized in the EU, which can 
simultaneously be authorized in several EU Member States). Products submitted for approval via the national procedure 
must follow the national authorization procedures, which vary from Member State to Member State. Products submitted 
for approval via the centralized procedure (only available and compulsory for certain products and indications; e.g., 
human medicines containing a new active substance to treat HIV or AIDS, advanced-therapy medicines, and orphan 
medicines) are assessed by the Committee for Medicinal Products for Human Use, or CHMP, a committee within the 
European Medicines Agency, or EMA. The CHMP assesses, inter alia, whether a medicine meets the necessary quality, 
safety and efficacy requirements and whether it has a positive risk-benefit balance. Products submitted for approval via 
the decentralized procedure, as for the mutual-recognition procedure, must first undergo an assessment performed by 
one Member State, or reference Member State, which another Member State may approve.

Various penalties and sanctions exist in different EU Member States for non-compliance with the EU marketing 
authorization procedure. In addition, for centrally authorized products the European Commission may also impose 
financial penalties on the holders of marketing authorizations if they fail to comply with certain obligations in connection 
with the authorizations as well as pharmacovigilance rules (a fine up to 5% of the marketing authorization holder’s 
turnover in the EU in the preceding business year for an infringement; daily penalty payments up to 2,5 % of the 
marketing authorization holder’s average daily turnover in the EU in the preceding business year, pending cessation of 
an infringement; and a fine up to 0.5% of the marketing authorization holder’s turnover in the EU in the preceding 
business year for e.g. failure to cooperate or supply of misleading information to authorities). If we or our potential 
collaborators fail to comply with applicable EU or other foreign regulatory requirements, we may be subject to, among 
other things, fines, suspension or withdrawal of regulatory approvals, product recalls, seizure of products, operating 
restrictions and criminal prosecution.

As described above, coverage and reimbursement status of veverimer, if approved, are provided for by the national 

laws of EU Member States. The requirements may differ significantly across the EU Member States. Also, at EU 
Member State level, actions have been taken to enact transparency laws regarding payments between pharmaceutical 
companies and health care professionals, or HCPs.

We are subject to European data protection laws, including the EU General Data Protection Regulation 2016/679, 

or GDPR (as implemented by EU Member States and the UK). The GDPR which came into effect on May 25, 2018, 
establishes requirements applicable to the processing of personal data (i.e., data which identifies an individual or from 
which an individual is identifiable), affords various data protection rights to individuals (e.g., the right to erasure of 
personal data) and imposes potential penalties for serious breaches of up to 4.0% annual worldwide turnover or €20 
million, whichever is greater. Individuals (e.g., study subjects) also have a right to compensation for financial or non-
financial losses (e.g., distress). The GDPR increases our responsibility and liability in relation to personal data that we 
process, and additional mechanisms put in place to address compliance with the GDPR must be kept under review as 
the legislative and regulatory landscape for data protection in Europe continues to evolve.

For other countries outside of the European Union, such as countries in Eastern Europe, Latin America or Asia, the 
requirements governing the conduct of clinical trials, product licensing, pricing and reimbursement vary from country to 
country. In all cases, again, the clinical trials must be conducted in accordance with GCP and the applicable regulatory 
requirements. The requirements and process governing the conduct of clinical trials, product licensing, privacy and data 
protection, pricing and reimbursement also vary from country to country.

Employees

As of December 31, 2019, we had 119 full-time employees. Our employees are not represented by labor unions or 

covered by collective bargaining agreements. We consider our relationship with our employees to be good.

Corporate Information

40

We were incorporated under the laws of the state of Delaware on May 22, 2013 and were granted certification of 
qualification in the state of California on August 5, 2013. Our principal offices are located at 7000 Shoreline Court, Suite 
201, South San Francisco, California. Our telephone number is (415) 429-7800. Our website address is tricida.com. The 
information in, or that can be accessed through, our website is not a part of this Annual Report on Form 10-K. Our 
Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to 
those reports filed or furnished pursuant to Section 12(a) or 15(d) of the Exchange Act are available, free of charge, on 
or through our website as soon as reasonably practicable after such reports and amendments are electronically filed 
with or furnished to the SEC. The SEC maintains an Internet site that contains, reports, proxy and information 
statements and other information regarding our filings at sec.gov. The contents of these websites are not incorporated 
into this filing. Further, references to the URLs for these websites are intended to be inactive textual references only. 

41

ITEM 1A. RISK FACTORS

Investing in our common stock involves a high degree of risk. You should carefully consider the risks 
described below, together with the other information contained elsewhere in this Annual Report on Form 10-K, 
including Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of 
Operations” and Part II, Item 8. "Financial Statements," as well as our other filings with the Securities and 
Exchange Commission, or SEC, before deciding whether to invest in our common stock. The occurrence of any of 
the events or developments described below could materially and adversely affect our business, financial 
condition, results of operations, cash flows and prospects. In such an event, the market price of our common 
stock could decline, and you may lose all or part of your investment. Additional risks and uncertainties not 
presently known to us or that we currently deem immaterial may also impair our business operations.

Risks Related to Our Limited Operating History, Financial Condition and Capital Requirements

We have a limited operating history, have incurred significant losses in each year since our inception 
and anticipate that we will continue to incur significant losses for the foreseeable future. We have only one 
product candidate, veverimer (also known as TRC101), for which an NDA has been accepted for review by 
the FDA through the Accelerated Approval Program that is still in clinical trials and has no commercial sales, 
which, together with our limited operating history, makes it difficult to assess our future viability.

We are a pharmaceutical company focused on the development and commercialization of our product 

candidate, veverimer, a non-absorbed, orally-administered polymer designed to treat metabolic acidosis in patients 
with chronic kidney disease, or CKD. We have only a limited operating history upon which you can evaluate our 
business and prospects. We are not profitable and have incurred significant losses in each year since our inception 
in 2013. Our net losses were $176.8 million, $102.8 million and $41.3 million for the years ended December 31, 
2019, 2018 and 2017, respectively. As of December 31, 2019, we had an accumulated deficit of $369.0 million. 
Pharmaceutical product development is a highly speculative undertaking, entails substantial upfront capital 
expenditures and involves a substantial degree of risk, including the risk that a potential product candidate will fail to 
demonstrate adequate efficacy or an acceptable safety profile, gain regulatory approval and become commercially 
viable. We have limited experience and have not yet demonstrated an ability to successfully overcome many of the 
risks and uncertainties frequently encountered by companies in new and rapidly evolving fields, particularly in the 
pharmaceutical industry. To date, we have focused principally on developing our product candidate veverimer. We 
have no products approved for commercial sale and have not generated any revenue from product sales or other 
arrangements to date and neither will we for the foreseeable future. We continue to incur significant research and 
development and other expenses related to our ongoing operations. We expect to continue to incur losses for the 
foreseeable future, and we anticipate these losses will increase as we continue our development of, and seek 
regulatory approval for, veverimer, prepare for potential commercialization of veverimer and continue to operate as 
a public company and comply with legal, accounting and other regulatory requirements.

If veverimer is not successfully developed or commercialized, including because of a lack of capital, or if we do 

not generate enough revenue following marketing approval, we will not achieve profitability and our business may 
fail. Even if we achieve profitability in the future, we may not be able to sustain profitability in subsequent periods. 
We may encounter unforeseen expenses, difficulties, complications, delays and other unknown factors that may 
adversely affect our business. The size of our future net losses will depend, in part, on the rate of future growth of 
our expenses and our ability to generate revenue. Our prior losses, combined with expected future losses, have had 
and will continue to have an adverse effect on our stockholders’ equity and working capital.

Further, the net losses we incur may fluctuate significantly from quarter to quarter and year to year, such that a 

period-to-period comparison of our results of operations may not be a good indication of our future performance.

We will require substantial additional financing to achieve our goals, and a failure to obtain this 
necessary capital when needed on acceptable terms, or at all, could force us to delay, limit, reduce or 
terminate our product development, other operations or commercialization efforts of veverimer.

We are currently advancing veverimer through clinical development. As of December 31, 2019, we had working 

capital of $273.0 million and cash, cash equivalents and investments of $355.0 million. We believe that we will 
continue to expend substantial resources for the foreseeable future as we continue clinical development, seek 
regulatory approval, and prepare for the commercialization of veverimer and develop any other product candidates 
we may choose to pursue in the future. These expenditures will include costs associated with research and 
development, sales and marketing, conducting nonclinical and clinical studies and trials, obtaining regulatory 

42

approvals, and manufacturing and supply. In addition, other unanticipated costs may arise. Because the outcome of 
any clinical trial and the regulatory approval process is highly uncertain, we cannot reasonably estimate the actual 
amounts necessary to successfully complete the development, regulatory approval process and commercialization 
of veverimer.

We believe that our existing cash, cash equivalents and investments of $355.0 million and additional borrowings 
under our Loan and Security Agreement, or Term Loan, with Hercules Capital, Inc., or Hercules, will allow us to fund 
our operating plan through at least the next 12 months. However, we have based these estimates on assumptions 
that may prove to be wrong, and we could spend our available capital resources much faster than we currently 
expect or require more capital to fund our operations than we currently expect. Moreover, our operating plan may 
change as a result of many factors currently unknown to us, and we may need to seek additional funds sooner than 
planned, through public or private equity or debt financings or other sources, such as strategic collaborations. Such 
financing may result in dilution to stockholders, imposition of debt covenants and repayment obligations, or other 
restrictions that may affect our business. In addition, we may seek additional capital due to favorable market 
conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating 
plans.

The amount and timing of our future funding requirements will depend on many factors, including, but not 

limited to:

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the time and cost necessary to obtain regulatory approvals for veverimer and any future product candidates 
that we develop, in-license or acquire;

our ability to obtain approval for veverimer through the Accelerated Approval Program;

the costs of confirmatory postmarketing studies or trials for veverimer that could be required by regulatory 
agencies or that we might otherwise choose to conduct;

the costs of obtaining commercial supplies of veverimer;

our ability to successfully commercialize veverimer;

the manufacturing, selling and marketing costs associated with veverimer, including the cost and timing of 
expanding our sales and marketing and medical affairs capabilities;

the timing and costs related to the optimization and scale-up of our manufacturing processes for veverimer 
and commercial supply of veverimer;

the amount and timing of sales, royalties and other revenue from veverimer, if approved, including the sales 
price and the availability of adequate third-party reimbursement;

the costs of operating as a public company;

the costs associated with any product recall that could occur;

the emergence, approval, availability, perceived advantages, relative cost, relative safety and relative 
efficacy of alternative and competing products or treatments;

the cash requirements of any future acquisitions or discovery of future product candidates, if any;

the progress, timing, scope and costs of conducting our nonclinical and clinical studies and trials, including 
the ability to enroll patients in a timely manner for our confirmatory postmarketing trial, VALOR-CKD (also 
known as TRCA-303), or potential future nonclinical and clinical studies and trials;

the costs of hiring and retaining personnel as we grow;

the time and cost necessary to respond to technological and market developments; and

the costs of preparing, filing, prosecuting, defending and enforcing any patent claims and other intellectual 
property rights, including litigation costs and the outcome of such litigation.

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We cannot assure you that anticipated additional financing will be available to us on favorable terms, or at all. 
Our current Term Loan contains negative covenants that restrict our ability to obtain additional debt financing. Any 
future debt financing into which we enter may impose upon us covenants that restrict our operations, including 
limitations on our ability to incur liens or additional debt, pay dividends, redeem our stock, make certain investments 
and engage in certain merger, consolidation or asset sale transactions. Although we have been successful in 
obtaining financing through the issuance of our equity securities and debt financing, we cannot assure you that we 
will be able to do so in the future. If we are unable to raise additional capital to fund our clinical development and 
commercialization of veverimer, if approved, and other business activities, we could be forced to significantly delay, 
scale back or abandon one or more clinical development programs or commercialization efforts and curtail or cease 
our operations. In addition, our ability to achieve profitability or to respond to competitive pressures would be 
significantly limited.

Risks Related to Our Business

We are dependent on the success of veverimer, our only product candidate. If we are unable to 

successfully develop, obtain regulatory approval for and commercialize veverimer, or experience significant 
delays in doing so, our business will be materially harmed.

To date, we have invested all of our efforts and financial resources in the research and development of 
veverimer, which is our only product candidate, and our business and future success depends on our ability to 
successfully develop, obtain regulatory approval for, and commercialize veverimer. In May 2018, we completed our 
multicenter, randomized, double-blind, placebo-controlled, pivotal Phase 3 clinical trial for veverimer, known as 
TRCA-301. The TRCA-301 trial enrolled 217 patients with metabolic acidosis and CKD. Eligible subjects who 
completed the 12-week treatment period in our pivotal Phase 3 trial were invited to continue in our 40-week 
extension trial, TRCA-301E, and we completed the TRCA-301E trial in March 2019. While we believe that these 
trials successfully met their primary and secondary endpoints and are sufficient to support our NDA, we cannot 
assure you that the U.S. Food and Drug Administration, or FDA, or any foreign regulatory agency will approve 
veverimer for marketing. 

We submitted our NDA for veverimer to the FDA in August 2019. We subsequently received the filing 
communication letter, also referred to as the Day 74 Letter, which stated that the NDA had been accepted for 
review by the FDA through the Accelerated Approval Program and that a user fee goal date of August 22, 2020 had 
been set under the Prescription Drug User Fee Act, or PDUFA. The FDA is not bound by, and has in the past 
missed, its PDUFA goal dates, and it is unknown whether the review of our NDA for veverimer will be completed by 
the PDUFA goal date designated in the Day 74 Letter or will be delayed. The Day 74 Letter also stated the FDA is 
currently planning to hold a Cardiovascular and Renal Drugs Advisory Committee, or CRDAC, meeting to discuss 
the NDA, which we believe would likely occur in the first half of 2020. While the FDA is not bound by the 
recommendation of the CRDAC, it considers such recommendations carefully when making decisions.

If, as anticipated, the FDA holds a CRDAC meeting, the CRDAC may recommend against approval or may 
recommend limitations, conditions or restrictions on the use of veverimer. The FDA may agree with some or all of 
those recommendations or impose its own limitations, conditions and restrictions on the use of veverimer. 
Furthermore, even if we obtain regulatory approval for veverimer, we need to continue to develop a commercial 
organization, or collaborate with a third party for the commercialization of veverimer, establish commercially viable 
pricing and obtain approval for coverage and adequate reimbursement from third parties, including government 
payers. If we are unable to successfully commercialize veverimer, we may not be able to generate sufficient 
revenue to continue our business.

Our near-term prospects, including our ability to finance our operations and generate revenue, will depend 
heavily on the successful development and commercialization of veverimer in the United States. Though we plan to 
engage in marketing approval discussions with foreign regulatory agencies in the future, we have not yet begun 
marketing approval discussions with any regulatory agency other than the FDA, and we are not currently seeking 
regulatory approval for veverimer outside the United States. The clinical and commercial success of veverimer will 
depend on a number of factors, including the following:

•

•

our ability to demonstrate veverimer’s safety and efficacy to the satisfaction of the FDA and/or foreign 
regulatory agencies;

the timely reporting of our confirmatory postmarketing trial, known as the VALOR-CKD trial;

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whether we are required by the FDA and/or foreign regulatory agencies to conduct additional clinical trials 
prior to approval to market veverimer;

the prevalence and severity of adverse side effects of veverimer in our ongoing and future clinical trials and 
commercial use, if approved;

the timely receipt of necessary regulatory and marketing approvals from the FDA and foreign regulatory 
agencies for veverimer;

our ability to obtain U.S. marketing approval for veverimer through the Accelerated Approval Program;

our ability to successfully conduct our confirmatory postmarketing trial, VALOR-CKD, and confirm clinical 
benefit of veverimer, assuming veverimer is initially approved through the FDA’s Accelerated Approval 
Program;

our ability to successfully commercialize veverimer, if approved for marketing and sale by the FDA and/or 
foreign regulatory agencies;

our ability to manufacture clinical trial and commercial quantities of veverimer drug substance and drug 
product and to develop and maintain commercially viable and validated manufacturing processes that are 
compliant with current good manufacturing practices, or cGMP, at a scale sufficient to meet anticipated 
demand and over time enable us to reduce our cost of manufacturing;

achieving and maintaining compliance with all regulatory requirements applicable to veverimer;

our success in educating physicians and patients about the potential benefits, risks, administration and use 
of veverimer;

acceptance of veverimer as safe and effective by patients and the medical community;

the availability, perceived advantages, relative cost, relative safety and relative efficacy of alternative and 
competing treatments;

our ability to obtain and sustain an adequate level of reimbursement for veverimer by third-party payers;

the effectiveness of our own or any future strategic collaborators’ marketing, sales and distribution strategy 
and operations;

our ability to continue to obtain protection for and to enforce our intellectual property rights in and to 
veverimer; and

our ability to avoid and defend against third-party patent interference or patent infringement claims or similar 
proceedings with respect to our patent rights and patent infringement claims.

Many of these factors are beyond our control. Accordingly, we cannot assure you that we will ever be able to 

generate revenue through the sale of veverimer. If we are not successful in commercializing veverimer, or are 
significantly delayed in doing so, our business will be materially harmed.

Our NDA for veverimer has been accepted for review by the FDA through the Accelerated Approval 
Program, but such program may not actually lead to a faster development or regulatory review or approval 
process. If we are unable to obtain approval of veverimer through the Accelerated Approval Program in the 
United States, we may be required to conduct additional nonclinical and clinical studies and trials beyond 
those that we currently contemplate, which could increase the expense of obtaining, reduce the likelihood 
of obtaining and/or delay the timing of obtaining, necessary marketing approval. Even if we receive approval 
from the FDA through the Accelerated Approval Program, if our confirmatory postmarketing trial does not 
verify clinical benefit, or if we do not comply with rigorous postmarketing requirements, the FDA may seek to 
withdraw the approval.

Our NDA for veverimer has been accepted for review by the FDA through the Accelerated Approval Program 

based on the results of our Phase 1/2 trial, TRCA-101, our pivotal Phase 3 clinical trial, TRCA-301, and our 40-
week extension trial, TRCA-301E. For any approval to market a drug product, we must provide the FDA and foreign 

45

regulatory agencies with clinical data that adequately demonstrate the safety and efficacy of the product for the 
indication applied for in the NDA or other respective regulatory filings. As described in the “Government Regulation” 
section, the Accelerated Approval Program is one of several approaches used by the FDA to make prescription 
drugs more rapidly available for the treatment of serious or life-threatening diseases. Section 506(c) of the Federal 
Food, Drug and Cosmetic Act, or FFDCA, provides that the FDA may grant accelerated approval to “a product for a 
serious or life-threatening condition upon a determination that the product has an effect on a surrogate endpoint that 
is reasonably likely to predict clinical benefit, or on a clinical endpoint that can be measured earlier than irreversible 
morbidity or mortality, that is reasonably likely to predict an effect on irreversible morbidity or mortality or other 
clinical benefit, taking into account the severity, rarity, or prevalence of the condition and the availability or lack of 
alternative treatments.” Approval through the Accelerated Approval Program is subject, however, to the requirement 
that the applicant conduct additional postmarketing clinical trials to verify and describe the drug’s clinical benefit, 
where there is uncertainty as to the relationship of the surrogate endpoint to the clinical benefit, or of the observed 
clinical endpoint to ultimate outcome. Typically, clinical benefit is verified when postmarketing clinical trials show 
that the drug provides a clinically meaningful positive therapeutic effect, that is, an effect on how a patient feels, 
functions, or survives. If such confirmatory postmarketing trial fails to confirm the drug’s clinical profile or risks and 
benefits, the FDA may withdraw its approval of the drug.

The FDA has broad discretion with regard to approval through the Accelerated Approval Program, and even if 

we believe that the Accelerated Approval Program is appropriate for veverimer, we cannot assure you that the FDA 
will ultimately agree. Furthermore, even if we do obtain approval through the Accelerated Approval Program, we 
may not experience a faster development process, review or approval compared to conventional FDA procedures.

While our NDA is being reviewed through the Accelerated Approval Program, there can be no assurance that 

approval will be granted on a timely basis, or at all. For example, there can be no assurance that the FDA will 
ultimately agree that the results of our pivotal Phase 3 clinical trial, TRCA-301, and our 40-week extension trial, 
TRCA-301E, and the design of our confirmatory postmarketing trial, VALOR-CKD, will be sufficient to support such 
approval. Additionally, the FDA could require us to conduct further studies or trials prior to granting approval of any 
type, including by determining that approval through the Accelerated Approval Program is not appropriate and that 
our pivotal Phase 3 clinical trial, TRCA-301, may not be used to support approval through the conventional 
pathway. We might not be able to fulfill the FDA’s requirements in a timely manner, which would cause delays, or 
approval might not be granted because our submission is deemed incomplete by the FDA. There also can be no 
assurance that after subsequent FDA feedback we will continue to pursue approval through the Accelerated 
Approval Program. A failure to obtain approval through the Accelerated Approval Program could result in a longer 
time period to obtain approval of veverimer, could increase the cost of its development, could delay our ability to 
commercialize veverimer and could significantly harm our financial position and competitive position in the 
marketplace.

We submitted our NDA for veverimer to the FDA in August 2019. We subsequently received the filing 
communication letter, also referred to as the Day 74 Letter, which stated that the NDA had been accepted for 
review by the FDA through the Accelerated Approval Program, and that a PDUFA goal date had been set for 
August 22, 2020. The FDA is not bound by, and has in the past missed, its PDUFA goal dates, and it is unknown 
whether the review of our NDA filing for veverimer will be completed by the PDUFA goal date designated in the Day 
74 Letter or will be delayed. The Day 74 Letter also stated that the FDA is currently planning to hold a CRDAC 
meeting to discuss the NDA, which we believe would likely occur in the first half of 2020. While the FDA is not 
bound by the recommendation of the CRDAC, it considers such recommendations carefully when making decisions.

Even if we receive approval for veverimer through the Accelerated Approval Program, we will be subject to 
rigorous postmarketing requirements, including the completion of our ongoing confirmatory postmarketing trial, 
VALOR-CKD, or such other confirmatory postmarketing trials as the FDA may require, to verify the clinical benefit of 
the product, and submission to the FDA of all promotional materials prior to their dissemination. The FDA could 
seek to withdraw the approval for multiple reasons, including if we fail to conduct any required confirmatory 
postmarketing trial with due diligence, our confirmatory postmarketing trial does not confirm the predicted clinical 
benefit, other evidence shows that the product is not safe or effective under the conditions of use, or we 
disseminate promotional materials that are found by the FDA to be false and misleading.

Any delay in obtaining, or inability to obtain, approval through the Accelerated Approval Program would delay or 

prevent commercialization of veverimer and would materially adversely affect our business, financial condition, 
results of operations, cash flows and prospects.

We may be unable to obtain regulatory approval for veverimer under applicable regulatory requirements.

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To gain approval to market a drug product, regardless of whether it is through the Accelerated Approval 
Program or the conventional pathway, we must provide the FDA and foreign regulatory agencies with clinical data 
that adequately demonstrates the safety and efficacy of the product for the intended indication applied for in the 
NDA or other respective regulatory filing. Drug development is a long, expensive and uncertain process, and delay 
or failure can occur at any stage of any of our clinical trials. A number of companies in the pharmaceutical industry 
have suffered significant setbacks in clinical trials even after promising results in earlier nonclinical or clinical studies 
and trials. These setbacks have been caused by, among other things, nonclinical findings made while clinical trials 
were underway and safety or efficacy observations made in clinical trials, including previously unreported adverse 
events. Success in nonclinical testing and early clinical trials does not ensure that later clinical trials will be 
successful, and the results of clinical trials by other parties may not be indicative of the results in trials we may 
conduct. In addition, results from compassionate use or investigator-initiated research programs, if implemented, 
may not be confirmed in Company-sponsored trials and/or may negatively impact the prospects for marketing 
approval for veverimer.

Our business currently depends entirely on the successful development, regulatory approval and 

commercialization of our sole product candidate, veverimer. Our NDA to market veverimer is currently under review 
by the FDA through the Accelerated Approval Program. We may not receive marketing approval for veverimer even 
though we believe we achieved the primary and secondary endpoints in our pivotal Phase 3 clinical trial, TRCA-301, 
and our 40-week extension trial, TRCA-301E. The FDA and other foreign regulatory agencies have substantial 
discretion in evaluating the results of our pivotal Phase 3 clinical trial, TRCA-301, our 40-week extension trial, 
TRCA-301E, and our earlier Phase 1/2 trial, TRCA-101. For example, notwithstanding our view to the contrary, the 
FDA may determine that the efficacy data and/or safety data from our Phase 1/2 trial, TRCA-101, our pivotal Phase 
3 clinical trial, TRCA-301, and our 40-week extension trial, TRCA-301E, do not support approval of our NDA for 
veverimer. Clinical data often are susceptible to varying interpretations and many companies that have believed that 
their products performed satisfactorily in clinical trials have nonetheless failed to obtain FDA approval for their 
products. The FDA or foreign regulatory agencies may disagree with our trial design and our interpretation of data 
from our Phase 1/2 trial, TRCA-101, our pivotal Phase 3 clinical trial, TRCA-301, our 40-week extension trial, 
TRCA-301E, or our nonclinical studies. Even though our NDA for veverimer has been accepted for review by the 
FDA through the Accelerated Approval Program based upon the FDA’s review of the data contained within the 
submission, upon the FDA’s review of the data from our pivotal Phase 3 clinical trial, TRCA-301, and our 40-week 
extension trial, TRCA-301E, the FDA may request additional information from us, including data from additional 
clinical trials, and, ultimately, may not grant marketing approval for veverimer.

While there are comparable approval pathways outside the United States that are similar to the Accelerated 

Approval Program, we have not yet explored whether veverimer might qualify for such a program. Foreign 
regulatory authorities may determine that the results of our pivotal Phase 3 clinical trial, TRCA-301, and our 40-
week extension trial, TRCA-301E, and our earlier Phase 1/2 trial, TRCA-101, are not sufficient to support regulatory 
approval and may require us to complete additional clinical trials or other studies prior to submitting an application 
for approval.

The denial of regulatory approval for veverimer could mean that we need to cease operations, and a 
delay in obtaining such approval could delay commercialization of veverimer and adversely impact our 
ability to generate revenue, our business and our results of operations.

If we are not successful in commercializing veverimer, or are significantly delayed in doing so, our business will 

be materially harmed, and we may need to curtail or cease operations. We currently have no drug products 
approved for sale, and we may never obtain regulatory approval to market veverimer, either through FDA’s 
Accelerated Approval Program or the conventional pathway. The research, testing, manufacturing, labeling, 
approval, sale, marketing and distribution of drug products are subject to extensive regulation by the FDA and other 
regulatory agencies in the United States and other countries, and such regulations differ from country to country. 
We are not permitted to market veverimer in the United States until we receive approval of our NDA from the FDA.

The FDA or any foreign regulatory agency can delay, limit or deny approval to market veverimer for many 

reasons, including:

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our inability to demonstrate to the satisfaction of the FDA or the applicable foreign regulatory agency that 
veverimer is safe and effective for the requested indication;

our inability to gain agreement from the FDA that veverimer is appropriate for approval through FDA’s 
Accelerated Approval Program;

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our inability to gain agreement from applicable foreign regulatory authorities that veverimer is appropriate 
for approval under applicable regulatory pathways;

the FDA’s or the applicable foreign regulatory agency’s disagreement with the interpretation of data from 
nonclinical and clinical studies and trials;

our inability to demonstrate that the clinical and other benefits of veverimer outweigh any safety or other 
perceived risks;

our ability to enroll an adequate number of patients in our confirmatory postmarketing trial, VALOR-CKD, in 
a timely manner;

the FDA’s or the applicable foreign regulatory agency’s requirement for additional nonclinical or clinical 
studies or trials;

the FDA’s or the applicable foreign regulatory agency’s having differing requirements for the trial protocols 
used in our clinical trials;

the FDA’s or the applicable foreign regulatory agency’s non-approval of the formulation, labeling and/or the 
specifications of veverimer;

the anticipated CRDAC meeting resulting in a recommendation against approval for veverimer or a 
recommendation that the FDA require, as a condition of approval, modifications to existing, or additional, 
nonclinical studies or clinical trials, limitations on approved labeling or distribution and use restrictions;

the FDA’s or the applicable foreign regulatory agency’s failure to accept the manufacturing processes or 
third-party manufacturers with which we contract; or

the potential for approval policies or regulations of the FDA or the applicable foreign regulatory agencies to 
significantly change in a manner rendering our clinical data insufficient for approval.

Of the large number of drugs in development, only a small percentage successfully complete the FDA or other 

regulatory approval processes and are commercialized.

Even if we eventually complete clinical testing and receive approval of our NDA or foreign marketing 

authorization for veverimer, the FDA or the applicable foreign regulatory agency may grant approval contingent on 
the performance of costly additional clinical trials, which may be required after approval. The FDA or the applicable 
foreign regulatory agency may also approve veverimer for a more limited indication and/or a narrower patient 
population than we originally request, and the FDA or applicable foreign regulatory agency may not approve the 
labeling that we believe is necessary or desirable for the successful commercialization of veverimer. Any delay in 
obtaining, or inability to obtain, applicable regulatory approval would delay or prevent commercialization of 
veverimer and would materially adversely impact our business and prospects.

Clinical drug development involves a lengthy and expensive process with an uncertain outcome, and 
results of earlier studies and trials may not be predictive of future trial results. Failure can occur at any stage 
of clinical development. While our NDA for veverimer has been accepted for review by the FDA through the 
Accelerated Approval Program, we have not submitted similar marketing approval applications to 
comparable foreign authorities.

Clinical testing is expensive and can take many years to complete, and its outcome is inherently uncertain. 
Failure can occur at any time during the clinical trial process. The results of nonclinical and clinical studies and trials 
of our product candidate may not be predictive of the results of later-stage clinical trials. For example, the positive 
results generated to date in our Phase 1/2 trial, TRCA-101, our pivotal Phase 3 trial, TRCA-301, and our 40-week 
extension trial, TRCA-301E, for veverimer do not ensure that our ongoing postmarketing trial, VALOR-CKD, or other 
future clinical trials will demonstrate similar results. Product candidates in later stages of clinical trials may fail to 
show the desired safety and efficacy despite having progressed through nonclinical and clinical studies and trials. A 
number of companies in the pharmaceutical industry have suffered significant setbacks in advanced clinical trials 
due to lack of efficacy or adverse safety profiles, notwithstanding promising results in earlier studies and trials, and 
we cannot be certain that we will not face similar setbacks. Based upon negative or inconclusive results, we or any 
potential future collaborator may decide, or regulators may require us, to conduct additional nonclinical and clinical 
studies and trials. In addition, data obtained from trials and studies are susceptible to varying interpretations, and 

48

regulators may not interpret our data as favorably as we do, which may delay, limit or prevent regulatory approval. 
Furthermore, we rely on contract research organizations, or CROs, and clinical trial sites to ensure the proper and 
timely conduct of our clinical trials and, while we have agreements governing their committed activities, we have 
limited influence over their actual performance. Even though we completed our pivotal Phase 3 clinical trial, 
TRCA-301, and our 40-week extension trial, TRCA-301E, and even if any future clinical trials are completed, the 
results may not be sufficient to obtain regulatory approval, regardless of whether it is through the Accelerated 
Approval Program or the conventional pathway, for veverimer in the time frame we anticipate, or at all. Additional 
clinical trial results may inform our understanding of the safety and efficacy of veverimer and could impact the 
design and conduct of ongoing and future clinical trials.

For approval of veverimer through the Accelerated Approval Program, we are required to conduct a 

confirmatory postmarketing clinical trial. If the FDA is not satisfied that we are diligently conducting our confirmatory 
postmarketing trial, VALOR-CKD, it may affect the timing of the potential approval of our NDA for veverimer by the 
FDA through the Accelerated Approval Program. In addition, our confirmatory postmarketing trial, VALOR-CKD, 
may have a large dropout rate of participants, or a low event rate, which could add time, expense and risk to the 
completion of the trial and could affect the results of the trial.

In addition, we do not know whether future clinical trials, if any, will begin on time, need to be redesigned, enroll 

an adequate number of patients on time or be completed on schedule, if at all. Clinical trials can be delayed, 
terminated early or aborted for a variety of reasons, including delay or failure to:

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obtain regulatory approval to commence a trial, if applicable;

reach agreement on acceptable terms with prospective CROs and clinical trial sites, the terms of which can 
be subject to extensive negotiation and may vary significantly among different CROs and trial sites;

obtain ethics committee or institutional review board, or IRB, approval at each site;

recruit suitable patients to participate in a trial and have such patients complete the clinical trial or return for 
post-treatment follow-up;

ensure that clinical sites follow the trial protocol, comply with good clinical practices, or GCPs, and continue 
to participate in a clinical trial;

address any patient safety concerns that arise during the course of a clinical trial;

ensure that patients comply with and complete clinical trial protocol;

achieve a sufficient level of endpoint events in the placebo group, if applicable;

initiate or add a sufficient number of clinical trial sites;

ensure that trial sites do not deviate from clinical trial protocol or drop out of a clinical trial;

address any conflicts with new or existing laws or regulations;

• manufacture sufficient quantities of product candidate for use in clinical trials and ensure clinical trial 

material is provided to clinical sites in a timely manner; and

•

obtain the statistical analysis plan to be used to evaluate the clinical trial data.

Patient enrollment is a significant factor in the conduct of clinical trials and is affected by many factors, including 

the size and nature of the patient population, the proximity of patients to clinical sites, the eligibility criteria for the 
trial, the design of the clinical trial, competing clinical trials and clinicians’ and patients’ perceptions as to the 
potential advantages of the drug being studied in relation to other available therapies, including any new drugs or 
treatments that may be approved for the indications we are investigating.

We could also encounter delays if a clinical trial is suspended or terminated by us, by the ethics committees or 
IRBs of the institutions in which such trials are being conducted, by an independent Safety Review Board, or SRB, 
for such trial or by the FDA or other regulatory agencies. Such parties may suspend or terminate a clinical trial due 
to a number of factors, including failure to conduct the clinical trial in accordance with regulatory requirements or our 

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clinical protocols, inspection of the clinical trial operations or trial site by the FDA or other regulatory agencies 
resulting in the imposition of a clinical hold, unforeseen safety issues or adverse side effects, failure to demonstrate 
a benefit from using a drug, changes in governmental regulations or administrative actions or lack of adequate 
funding to continue the clinical trial.

Further, conducting clinical trials in foreign countries presents additional risks that may delay completion of our 

clinical trials. These risks include the failure of physicians or enrolled patients in foreign countries to adhere to 
clinical protocol as a result of differences in healthcare services or cultural customs, managing additional 
administrative burdens associated with foreign regulatory schemes, as well as political and economic risks relevant 
to such foreign countries. In addition, the FDA may determine that clinical trial results obtained in foreign subjects 
do not represent the safety and efficacy of a product when administered in U.S. patients and are thus not supportive 
of our NDA approval in the United States.

If we experience delays in the start or completion of, or termination of, any clinical trial of our sole product 
candidate, veverimer, the commercial prospects of veverimer may be harmed, and our ability to generate product 
revenue from veverimer will be delayed. In addition, any delays in completing our clinical trials will increase our 
costs, slow down our veverimer development and approval process and jeopardize our ability to commence product 
sales and generate revenue. Any of these occurrences may significantly harm our business, financial condition and 
prospects. In addition, many of the factors that cause, or lead to, a delay in the commencement or completion of 
clinical trials may also ultimately lead to the denial of regulatory approval of veverimer.

Results from completed human clinical trials may not be representative of the results that are obtained 

after approval, if obtained, and product launch.

Human clinical trials are very complicated undertakings and working with patients with CKD is particularly 
difficult because of the serious nature of the disease and the comorbidities experienced by these patients. If we 
obtain FDA approval through the Accelerated Approval Program, safety risks not identified in our prior clinical trials 
may first appear after we obtain approval and commercialize veverimer. Any new postmarketing adverse events 
may significantly impact our ability to market veverimer and may require that we make changes to the product label 
that could adversely impact our commercialization efforts, recall some or all of the product, or discontinue 
commercialization of the product. Furthermore, if the confirmatory postmarketing trial, VALOR-CKD, fails to confirm 
veverimer’s clinical profile or clinical benefits, the FDA may withdraw its approval of veverimer. Any of these events 
would materially harm our business.

We have relied and continue to rely on third parties, particularly CROs, to conduct and complete our 

clinical trials. If these third parties do not successfully carry out their contractual duties or meet expected 
deadlines, we may be unable to obtain regulatory approval for or commercialize veverimer, if approved.

We do not have the ability to independently conduct clinical trials. We rely on medical institutions, clinical 

investigators, contract laboratories, collaborative partners and other third parties, such as CROs, to conduct clinical 
trials for veverimer. We rely on these third parties to conduct and complete our clinical trials according to GCPs and 
the study protocol, statistical analysis plan and other study-specific documents (for example, monitoring and 
blinding plans). Responsibilities of these third parties include, but are not limited to, monitoring of the study sites 
and ensuring that the study is conducted in compliance with International Council for Harmonization of Technical 
Requirements for Pharmaceuticals for Human Use, or ICH, guidelines and GCPs, the informed consent process, 
protocol-specified requirements, safety reporting requirements, data collection guidelines and all study-specific 
blinding procedures.

Our TRCA-301 trial was conducted at 37 sites and our 40-week extension trial, TRCA-301E, was conducted at 
29 sites in the United States and Europe. Our confirmatory postmarketing trial, VALOR-CKD, is being conducted in 
a significantly greater number of countries and a significantly greater number of sites than our TRCA-301 and 
TRCA-301E trials. The third parties with whom we contract for execution of our clinical trials play a significant role in 
the conduct of these trials and the subsequent collection and analysis of data. However, these third parties are not 
our employees, and, except for contractual duties and obligations, we have limited ability to control the amount or 
timing of resources that they devote to our program. Although we rely on these third parties to conduct all of our 
clinical trials in accordance with a transfer of obligations, we remain responsible for ensuring that each of our clinical 
trials is conducted and its data analyzed in accordance with its protocol and statistical analysis plan. Moreover, the 
FDA and foreign regulatory agencies require us to comply with regulations and standards, including ICH guidelines 
and GCPs for conducting, monitoring, recording and reporting the results of clinical trials to ensure that the data and 

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results are scientifically credible and accurate, and that the trial subjects are adequately informed of the potential 
risks of participating in clinical trials.

In addition, the execution of clinical trials, and the subsequent compilation and analysis of the data produced, 
requires coordination among various parties. In order for these functions to be carried out effectively and efficiently, 
it is imperative that these parties communicate and coordinate with one another. Moreover, these third parties may 
also have relationships with other commercial entities, some of which may compete with us. These third parties may 
terminate their agreements with us upon as little as 30 days’ prior written notice. Some of these agreements may 
also be terminated by such third parties under certain other circumstances, including our insolvency. If the third 
parties conducting our clinical trials do not perform their contractual duties or obligations, experience work 
stoppages, do not meet expected deadlines, terminate their agreements with us or need to be replaced, or if the 
quality or accuracy of the clinical data they obtain is compromised due to the intentional or inadvertent failure to 
adhere to our clinical trial protocols or GCPs, or for any other reason, we may need to enter into new arrangements 
with alternative third parties, which could be difficult, costly or impossible, and our clinical trials may be extended, 
delayed or terminated or may need to be repeated. The third parties upon whom we rely may be inspected by FDA 
or other regulatory authorities in relation to our, or to other, studies or trials. Such inspections may result in FDA or 
other regulatory authorities not accepting the data produced by the third party.

If any of the foregoing were to occur, we may not be able to obtain regulatory approval for or commercialize 

veverimer, which would have a material adverse effect on our business, results of operations and financial 
condition.

We rely completely on third-party suppliers to manufacture our clinical drug supply of veverimer drug 

substance and drug product, and we intend to rely on third parties to produce commercial supply of 
veverimer drug substance and drug product, if approved.

We do not currently have, nor do we plan to acquire, the infrastructure or internal capability to manufacture 
veverimer on a clinical or commercial scale. As such, we contract with third-party service providers to manufacture 
veverimer drug substance and drug product and to perform analytical testing services under cGMPs. 
Pharmaceutical manufacturing facilities are subject to inspection by the FDA and foreign regulatory agencies on a 
regular basis, before and after product approval.

We do not directly control, and are completely dependent on, our contract manufacturers for compliance with, 
applicable requirements including cGMP, for manufacture of both veverimer drug substance and drug product. If our 
contract manufacturers cannot successfully manufacture material that conforms to our specifications or they are 
unable to comply with the strict regulatory requirements of the FDA or foreign regulatory agencies, we will not be 
able to secure and/or maintain adequate supply of veverimer drug substance and drug product. In addition, we have 
no direct control over the ability of our contract manufacturers to maintain adequate quality control, quality 
assurance and qualified personnel. Furthermore, all of our contract manufacturers are engaged with other 
companies to supply and/or manufacture materials or products for such companies, which exposes our 
manufacturers to regulatory risks for the production of such other materials and products. As a result, failure to meet 
the regulatory requirements for the production of those materials and products may generally affect the regulatory 
clearance of our contract manufacturers’ facilities. If our contract manufacturers’ facilities fail to comply with the FDA 
or a comparable foreign regulatory agency requirement, we may need to find alternative manufacturing facilities for 
veverimer drug substance or drug product, which would negatively impact our ability to develop, obtain regulatory 
approval for, or commercialize veverimer, if approved, and materially adversely affect our financial condition.

We currently depend on a single third-party supplier for the manufacture of veverimer drug substance, 

and any performance failure on the part of our supplier could delay the development and potential 
commercialization of veverimer.

We cannot be certain that our drug substance supplier will continue to provide us with sufficient quantities of 
veverimer drug substance, or that our manufacturers will be able to produce sufficient quantities of drug product 
incorporating such drug substance, to satisfy our anticipated specifications and quality requirements, or that such 
quantities can be obtained at pricing necessary to sustain acceptable pharmaceutical margins. We believe that 
there are a limited number of experienced contract manufacturers in the world capable of manufacturing a polymeric 
drug substance such as veverimer. Our current dependence on a single supplier for our drug substance and the 
challenges we may face in obtaining adequate supply of veverimer drug substance involves several risks, including 
limited control over pricing, availability, quality and delivery schedules. Any supply interruption in veverimer drug 
substance or drug product could materially harm our ability to complete our development program or satisfy 

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commercial demand, if approved, until a new source of supply, if any, could be identified and qualified. We may be 
unable to find a sufficient alternative supply channel in a reasonable time or on commercially reasonable terms. Any 
performance failure on the part of our suppliers could delay the development and potential commercialization of 
veverimer, including limiting supplies necessary for clinical trials and regulatory approvals, which would have a 
material adverse effect on our business.

Moreover, our current supplier of drug substance may not have the capacity to manufacture veverimer drug 
substance in the quantities that we believe will be sufficient to meet anticipated market demand or to enable us to 
achieve the economies of scale necessary to reduce the manufacturing cost of veverimer drug substance. We 
entered into a commercial supply agreement with our current drug substance supplier and are engaging in 
discussions with a potential second supplier for commercial drug substance. Our long-term commitment under the 
commercial supply agreement to purchase veverimer drug substance could create a significant financial obligation. 
Negotiations with a potential second supplier may not lead to a definitive agreement on acceptable terms, or at all, 
which could have a material adverse effect on our business. Our business plan assumes that we are able to 
develop a supply chain with multiple suppliers and significantly decrease our cost of goods within the first several 
years of commercialization of veverimer, if approved, enabling us to achieve gross margins similar to those 
achieved by other companies with polymer-based drugs. If we are unable to reduce the manufacturing cost of 
veverimer drug substance, our financial results will suffer and our ability to achieve profitability will be significantly 
jeopardized. Outside of our current supplier, we currently do not have any agreements for the commercial 
production of veverimer drug substance. If our contract manufacturer for drug substance is unable to source, or we 
are unable to purchase, sufficient quantities of materials necessary for the production of veverimer drug substance, 
the ability of veverimer to reach its market potential or to be timely launched, would be delayed or suffer from a 
shortage in supply, which would impair our ability to generate revenue from the sale of veverimer. If there is a 
disruption to our contract manufacturers’ or suppliers’ relevant operations, we will have no other means of producing 
veverimer drug substance until they restore the affected facilities or we or they procure alternative manufacturing 
facilities. Additionally, any damage to or destruction of our contract manufacturers’ or suppliers’ facilities or 
equipment may significantly impair our ability to manufacture veverimer on a timely basis.

While we are in the process of validating our two-step manufacturing process with our third-party 
supplier, any delay in validation, performance failure or time delay in further optimizing or scaling our two-
step drug substance manufacturing process could materially adversely affect, delay or interrupt the 
execution of our confirmatory postmarketing trial, VALOR-CKD, and potentially impact the 
commercialization of veverimer, if approved.

We believe we have sufficient drug substance for at least the next 12 months to supply the anticipated demand 

of our confirmatory postmarketing trial, VALOR-CKD, and anticipate we will have sufficient drug substance for at 
least the next 12 months to supply our initial anticipated commercial demand, if approved. The scale of the first step 
in our drug substance manufacturing process, step one, and the scale of the second step in our manufacturing 
process, step two, have been increased with our third-party supplier to the initial anticipated commercial batch sizes 
for each of the steps of approximately 640 and 700 kg, respectively. As compared to soluble, small organic 
molecule pharmaceuticals, insoluble, non-absorbed polymers are manufactured in larger batches to satisfy greater 
doses, e.g., gram quantities versus milligram or even microgram quantities per dose, which presents unique 
requirements both in terms of scale-up and process controls. Any difficulties experienced in the ongoing effort to 
further optimize and scale our drug substance manufacturing process could materially adversely affect or delay our 
ability to (i) meet regulatory process validation requirements to demonstrate that our manufacturing process is 
capable of consistently delivering quality product, or (ii) have sufficient quantities of veverimer drug product 
manufactured to successfully conduct our ongoing confirmatory postmarketing trial, VALOR-CKD, or (iii) have 
sufficient quantities of veverimer drug substance and drug product to supply commercial supply of veverimer, if 
approved, all of which would have a material adverse effect on our business and our prospects.

If we fail to establish an effective distribution process for veverimer drug product, if approved, our 

business may be adversely affected.

Once a product receives marketing approval, the manufacturing, distribution, processing, formulation, 

packaging, labeling, promotion and sale of pharmaceutical products are subject to extensive regulation by federal 
and state agencies, which are subject to change by the relevant federal, state and local agencies. For example, 
Title II of the Federal Drug Quality and Security Act of 2013, known as the Drug Supply Chain Security Act, or 
DSCSA, has imposed new “track and trace” requirements on the distribution of prescription drug products by 
manufacturers, distributors, and other entities in the drug supply chain. The DSCSA requires product identifiers (i.e., 

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serialization) on prescription drug products in order to establish an electronic interoperable prescription product 
system to identify and trace certain prescription drugs distributed in the United States. These requirements (some of 
which are still being phased in) preempt state drug pedigree requirements.

We do not currently have the infrastructure necessary for distributing pharmaceutical products to patients and 

there is a risk that we may be unable to comply with the serialization requirements of the DSCSA within the 
necessary time frames. Furthermore, compliance with the DSCSA or any future federal or state electronic pedigree 
requirements may increase the Company’s operational expenses and impose significant administrative burdens.

While we have entered into a contract with a third-party logistics company to warehouse veverimer and 
distribute it, the distribution network will require significant coordination with our sales, marketing, market access 
and finance teams. Failure to coordinate financial systems could negatively impact our ability to accurately report 
product revenue. If we are unable to effectively establish and manage a compliant distribution process, the 
commercial launch and sales of veverimer, if approved, will be delayed or severely compromised and our results of 
operations may be harmed.

Even if veverimer obtains regulatory approval, it may never achieve market acceptance or commercial 

success, which will depend, in part, upon the degree of acceptance among physicians, patients, patient 
advocacy groups, third-party payers and the medical community.

Even if we obtain FDA or other regulatory approvals, veverimer may not achieve market acceptance among 

physicians, patients, patient advocacy groups, third-party payers or the medical community, and may not be 
commercially successful. If approved, market acceptance of veverimer depends on a number of factors, including:

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the efficacy of the product as demonstrated in clinical trials;

the prevalence and severity of any side effects and overall safety profile of the product;

the clinical indications for which the product is approved;

the potential and perceived advantages of veverimer over current options or future alternative treatments;

the effectiveness of our commercial organization and distribution channels;

the quality of our relationships with patient advocacy groups;

the availability and sufficiency of third-party coverage and reimbursement;

acceptance by physicians, major operators of clinics and patients of the product as a safe and effective 
chronic daily treatment and willingness of physicians to prescribe veverimer;

the cost of treatment in relation to alternative treatments and willingness to pay for veverimer, if approved, 
on the part of patients;

relative convenience and ease of administration of veverimer; and

the availability of the product and our ability to meet market demand, including providing a reliable supply 
for long-term daily treatment.

Any failure by our product candidate, if it obtains regulatory approval, to achieve market acceptance or 

commercial success would adversely affect our results of operations.

The incidence and prevalence of the target patient population for veverimer are based on estimates and 

third-party sources. If the market opportunity for veverimer is smaller than we estimate or if any approval 
that we obtain is based on a narrower definition of the patient population, our revenue and ability to achieve 
profitability might be materially and adversely affected.

Periodically, we make estimates regarding the incidence and prevalence of target patient populations based on 

various third-party sources and internally generated analysis. These estimates may be inaccurate or based on 
imprecise data. For example, the total addressable market opportunity for veverimer will depend on, among other 
things, acceptance of veverimer by the medical community and patient access, drug pricing and reimbursement. 
The number of patients in the addressable markets may turn out to be lower than expected, patients may not be 

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otherwise amenable to treatment with veverimer, or new patients may become increasingly difficult to identify or 
gain access to, all of which may significantly harm our business, financial condition, results of operations and 
prospects.

Veverimer, if approved, may face significant competition and our failure to effectively compete may 

prevent us from achieving significant market penetration.

While we are not aware of any therapies approved by the FDA for the chronic treatment of metabolic acidosis 
and are not aware of any active clinical development programs other than ours for such a treatment in the United 
States, the pharmaceutical market is highly competitive and dynamic, and is characterized by rapid and substantial 
technological development and product innovations. Our veverimer development program may serve as a template 
for a fast follower to develop a competing product candidate. Furthermore, we expect veverimer to compete against 
non-approved options for increasing serum bicarbonate levels, including oral alkali supplementation such as sodium 
bicarbonate, sodium citrate or potassium citrate. Veverimer may not be able to compete effectively with existing 
non-approved options for increasing serum bicarbonate levels or new drugs that may be developed by competitors. 
The risk of competition is specifically important to us because veverimer is our only product candidate.

Our competitors may have materially greater financial, manufacturing, marketing, research and drug 

development resources than we do. Large pharmaceutical companies in particular, may have extensive expertise in 
nonclinical and clinical testing and in obtaining regulatory approvals for drugs. In addition, academic institutions, 
government agencies, and other public and private organizations conducting research may seek patent protection 
with respect to potentially competitive products or technologies. These organizations may also establish exclusive 
collaborative or licensing relationships with our competitors.

Failure to compete effectively against available options for raising serum bicarbonate levels or in the future with 

new products would materially harm our business, financial condition and results of our operations.

We currently have limited sales or marketing capabilities. If we are unable to establish effective sales and 

marketing capabilities or if we are unable to enter into agreements with third parties to commercialize 
veverimer, we may not be able to effectively generate product revenue.

We currently have limited sales or marketing capabilities. In order to commercialize veverimer, if approved, we 
must build marketing and sales capabilities or make arrangements with third parties to perform these services, and 
we may not be successful in doing so. If veverimer is approved by the FDA, we plan to initially commercialize it in 
the United States by deploying an 80- to 90-person specialty sales force targeting that subset of nephrologists most 
focused on treating patients with CKD. Building the requisite sales, marketing and distribution capabilities will be 
expensive and time-consuming and will require significant attention of our leadership team to manage. Any failure 
or delay in the development of our sales, marketing or distribution capabilities would adversely impact the 
commercialization of our product. The competition for talented individuals experienced in selling and marketing 
pharmaceutical products is intense, and we cannot assure you that we can assemble an effective team. 
Additionally, we may choose to collaborate, either globally or on a territory-by-territory basis, with third parties on the 
commercialization of veverimer. If we are unable to enter into such arrangements on acceptable terms or at all, we 
may not be able to successfully commercialize veverimer if and when it receives regulatory approval or any such 
commercialization may experience delays or limitations.

We may be subject to additional risks related to operating in foreign countries either ourselves or through a 

third-party, including:

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differing regulatory requirements in foreign countries;

unexpected changes in tariffs, trade barriers, price and exchange controls and other regulatory 
requirements;

economic weakness, including inflation or political instability in particular foreign economies and markets;

compliance with tax, employment, immigration and labor laws for employees living or traveling abroad;

foreign taxes, including withholding of payroll taxes;

foreign currency fluctuations, which could result in increased operating expenses and reduced revenue, and 
other obligations incident to doing business in another country;

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difficulties staffing and managing foreign operations;

workforce uncertainty in countries where labor unrest is more common than in the United States;

potential liability under the Foreign Corrupt Practices Act of 1977 or comparable foreign regulations;

challenges enforcing our contractual and intellectual property rights, especially in those foreign countries 
that do not respect and protect intellectual property rights to the same extent as the United States;

production shortages resulting from any events affecting raw material supply or manufacturing capabilities 
abroad; and

business interruptions resulting from geopolitical actions, including war and terrorism, or health crises.

Our clinical development program may not uncover all possible adverse events that patients who take 

veverimer may experience. The number of subjects exposed to veverimer treatment and the average 
exposure time in the clinical development program may be inadequate to detect adverse events, or chance 
findings, that may only be detected once veverimer is administered to more patients and for greater periods 
of time.

Clinical trials, by their nature, utilize a sample of the potential patient population. However, with a limited 
number of subjects and limited duration of exposure, we cannot be fully assured that veverimer has no serious or 
severe side effects, and any such side effects may only be uncovered with a significantly larger number of patients 
exposed to the drug candidate. It is possible that ongoing and future clinical trials, as well as reports received from 
compassionate use or investigator-initiated research programs, or veverimer used commercially, if approved, may 
identify safety concerns.

Although we have monitored the subjects in our trials for certain safety concerns and we have not seen 

evidence of significant safety concerns in our clinical trials to date, patients treated with veverimer may experience 
adverse reactions. The most commonly reported adverse effects experienced by more patients on veverimer than 
placebo in the TRCA-101, TRCA-301 and TRCA-301E trials combined were mild to moderate diarrhea and 
flatulence. It is possible that the FDA may ask for additional data regarding such matters. In addition, patients with 
CKD often experience significant and frequent comorbidities and are being treated with other medications. Although 
in vitro studies and human drug-drug interaction, or DDI, studies available to date indicate that veverimer does not 
interact with medications commonly used by patients with CKD, if significant DDIs occur in the future, veverimer 
may no longer be compatible with some of the medications used to treat patients with CKD. If safety problems occur 
or are identified after veverimer reaches the market, the FDA may require that we amend the labeling of veverimer, 
recall veverimer, or even withdraw approval for veverimer.

The FDA may not agree that the safety of veverimer has been sufficiently characterized by the amount 

and quality of data provided from our clinical development program.

The NDA safety database for new drugs intended for chronic use in non-life-threatening conditions typically 

includes at least 1,500 individuals, with at least 100 patients exposed to the drug for a minimum of one year 
(Guideline for Industry ICH-E1A: The Extent of Population Exposure to Assess Clinical Safety: For Drugs Intended 
for Long-term Treatment of Non-Life-Threatening Conditions). At the time of submitting our NDA, the veverimer 
safety database was significantly smaller than the guidance suggests. Given the toxicology study results and clinical 
safety profile observed to date for veverimer, as well as the non-absorbed nature of the drug, we believe our 
proposed safety database was adequate for the filing of the veverimer NDA and its review through the Accelerated 
Approval Program. However, we cannot assure you that the FDA will agree with our proposal. If they require 
additional safety data in our NDA, this could have a material adverse effect on our expected clinical and regulatory 
timelines, business, prospects, financial condition and results of operations.

Our product candidate, veverimer, may cause undesirable side effects or have other properties that 
could delay or prevent its regulatory approval, reduce the commercial attractiveness of a prescribing label or 
result in significant negative consequences following regulatory approval, if approved.

Clinical studies of veverimer could reveal a high and unacceptable incidence and severity of undesirable and 
currently unknown side effects. Undesirable side effects could adversely affect patient enrollment in clinical studies, 
cause us or regulatory authorities to interrupt, delay or halt clinical studies or result in the delay, denial or withdrawal 
of regulatory approval by the FDA, the European Medicines Agency, or EMA, or other global regulatory authorities. 

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Undesirable side effects also could result in regulatory authorities mandating additional clinical testing prior to 
approval, postmarketing testing following approval, the implementation of risk minimization measures or a more 
restrictive prescribing label for a product, which, in turn, could limit the market acceptance of the product by 
physicians and consumers.

Drug-related side effects could result in potential product liability claims, especially if they were not included in 

the consent forms for clinical trials, including trials conducted under compassionate use or investigator-initiated 
research programs, or were not included in the warnings of any FDA-approved labeling. We currently carry product 
liability insurance covering use in our clinical trials in the amount of $20.0 million in the aggregate; however, we may 
not be able to maintain insurance coverage at a reasonable cost or in sufficient amounts if liability and legal costs 
exceed the threshold limited. A successful product liability claim or series of claims brought against us could cause 
our stock price to decline and, if judgments exceed our insurance coverage, could adversely affect our results of 
operations, business and financial condition, and commercial reputation. In addition, regardless of merit or eventual 
outcome, product liability claims may result in impairment of our business reputation, withdrawal of clinical study 
participants, increased costs due to related litigation, distraction of management’s attention from our primary 
business, initiation of investigations by regulators or other governmental entities, monetary awards to patients or 
other claimants, the inability to commercialize veverimer and decreased demand for our product, if approved for 
marketing.

Additionally, if veverimer receives regulatory approval, and we or others later identify undesirable side effects or 

unanticipated adverse events caused by such product, a number of potentially significant negative consequences 
could result, including but not limited to:

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the requirement of additional warnings on the prescribing label;

the withdrawal of approvals by regulatory authorities;

the requirement of a risk evaluation and mitigation strategy plan, which could include a medication guide 
outlining the risks of such side effects for distribution to patients, a communication plan for healthcare 
providers and/or other elements to assure safe use;

litigation and the potential to be held liable for harm caused to patients; and

an adverse effect on our reputation.

Any of these events could prevent us from achieving or maintaining market acceptance of veverimer and could 

significantly harm our business, results of operations, financial condition and prospects.

We will need to significantly increase the size of our organization, and we may experience difficulties in 

managing growth.

As of December 31, 2019, we had 119 full-time employees. We will need to continue to expand our managerial, 

operational, finance and other resources in order to manage our operations, regulatory filings, manufacturing and 
supply activities, clinical trials, marketing and commercialization activities for veverimer. Our management, 
personnel, systems and facilities currently in place may not be adequate to support this future growth. Our need to 
effectively execute our growth strategy requires that we:

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expand our general and administrative, medical affairs and sales and marketing organizations;

identify, recruit, retain, incentivize and integrate additional employees;

• manage our internal development efforts effectively while carrying out our contractual obligations to third 

parties; and

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continue to improve our operational, legal, financial and management controls, reporting systems and 
procedures.

Our future financial performance and our ability to successfully develop and commercialize veverimer will 
depend, in part, on our ability to effectively manage any future growth. Our management will have to dedicate a 
significant amount of its attention to managing these growth activities. In addition, we expect to incur additional 
costs in hiring, training and retaining such additional personnel.

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If we are not able to effectively expand our organization by hiring new employees and expanding our groups of 

consultants and contractors, we may not be able to successfully execute the tasks necessary to further develop and 
commercialize our product candidate and, accordingly, may not achieve our research, development and 
commercialization goals.

If we fail to attract and keep senior management, we may be unable to successfully develop veverimer, 

conduct our clinical trials and commercialize veverimer, if approved.

Our success depends in part on our continued ability to attract, retain and motivate highly qualified personnel. In 
particular, we are highly dependent upon our experienced senior management. The loss of services of any of these 
individuals or our inability to attract and retain additional qualified personnel could delay or prevent the successful 
development of our product, completion of our planned clinical trials or the commercialization of veverimer. Although 
we have entered into employment agreements with our senior management team, these agreements do not provide 
for a fixed term of service. Any of our employees could leave our employment at any time, with or without notice.

Although we have not historically experienced unique difficulties attracting and retaining qualified employees, 

we could experience such problems in the future. For example, competition for qualified personnel in the 
biotechnology and pharmaceuticals field is intense due to the limited number of individuals who possess the skills 
and experience required by our industry. We will need to hire additional personnel as we expand our clinical 
development and commercial activities. We may not be able to attract and retain quality personnel on acceptable 
terms, or at all. In addition, to the extent we hire personnel from competitors, we may be subject to allegations that 
they have been improperly solicited or that they have divulged proprietary or other confidential information, or that 
their former employers own their research output.

We may hire part-time employees or use consultants. As a result, certain of our employees, officers, directors or 

consultants may not devote all of their time to our business, and may from time to time serve as employees, 
officers, directors and consultants of other companies.

Our employees, independent contractors, consultants, commercial partners and vendors may engage in 

misconduct or other improper activities, including noncompliance with regulatory standards and 
requirements.

We are exposed to the risk of fraud or other illegal activity by our employees, independent contractors, 

consultants, commercial partners and vendors. We have adopted a code of business conduct and ethics, but it is 
not always possible to identify and deter employee misconduct, and the precautions we take to detect and prevent 
inappropriate conduct may not be effective in controlling unknown or unmanaged risks or losses or in protecting us 
from governmental investigations or other actions or lawsuits stemming from misconduct or other failure to be in 
compliance with applicable laws or regulations.

Misconduct by our employees, independent contractors, consultants, commercial partners and vendors could 

include intentional failures to comply with FDA or international regulations, provide accurate information to the FDA 
or other international regulatory bodies, comply with manufacturing standards, comply with federal and state 
healthcare fraud and abuse laws and regulations, report financial information or data timely, completely and 
accurately or disclose unauthorized activities to us. In particular, sales, marketing and business arrangements in the 
healthcare industry are subject to extensive laws and regulations intended to prevent fraud, kickbacks, self-dealing 
and other abusive practices. These laws and regulations may restrict or prohibit a wide range of pricing, 
discounting, marketing and promotion, sales commission, customer incentive programs and other business 
arrangements. Misconduct by third parties could also involve the improper use of information obtained in the course 
of clinical trials.

If our operations are found to be in violation of any of the laws described above or any other governmental 

regulations that may apply to us, we may be subject to significant civil, criminal and administrative penalties, 
damages, fines, disgorgement, individual imprisonment, possible exclusion from government-funded healthcare 
programs, such as Medicare and Medicaid, additional integrity oversight and reporting obligations, contractual 
damages, reputational harm, diminished profits and future earnings and the curtailment or restructuring of our 
operations, any of which could adversely affect our ability to operate our business and our results of operations.

If we seek and obtain approval to commercialize veverimer outside of the United States, a variety of risks 

associated with international operations could materially adversely affect our business.

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If veverimer is approved for commercialization outside the United States, we may enter into agreements with 

third parties to market veverimer outside the United States. We expect that we will be subject to additional risks 
related to entering into these international business relationships, including:

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different regulatory requirements for drug approvals in foreign countries;

differing U.S. and foreign drug import and export rules;

reduced protection for intellectual property rights in foreign countries;

unexpected changes in tariffs, trade barriers and regulatory requirements;

different reimbursement systems, and different competitive drugs indicated to treat metabolic acidosis;

economic weakness, including inflation, or political instability in particular foreign economies and markets;

compliance with tax, employment, immigration and labor laws for employees living or traveling abroad;

foreign taxes, including withholding of payroll taxes;

foreign currency fluctuations, which could result in increased operating expenses and reduced revenue, and 
other obligations incident to doing business in another country;

workforce uncertainty in countries where labor unrest is more common than in the United States;

production shortages resulting from any events affecting raw material supply or manufacturing capabilities 
abroad;

potential liability resulting from development work conducted by these distributors; and

business interruptions resulting from geopolitical actions, including war and terrorism, natural disasters, or 
national, regional, or global healthcare crises.

Our Term Loan contains restrictions that limit our flexibility in operating our business.

Our Term Loan with Hercules contains various covenants that limit our ability to engage in specified types of 

transactions without obtaining prior consent from our lenders. These covenants limit our ability to, among other 
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use all of our cash;

create, incur, assume, guarantee or be or remain liable with respect to any indebtedness;

prepay any indebtedness;

subject our assets that serve as collateral under the loan agreement, our intellectual property and all other 
property and assets used in our business to any lien or legal process;

acquire, own or make investments;

repurchase or redeem shares of our capital stock;

declare or pay any cash dividends or make any other cash distributions;

lend money to our employees, officers or directors, or guarantee such loans;

waive, release or forgive indebtedness owed by our employees, officers or directors;

voluntarily or involuntarily transfer, sell, lease, license, lend or convey our assets;

• merge or consolidate with another business organization;

•

change our corporate name, legal form or jurisdiction of formation;

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•

•

suffer a change in control;

relocate our chief executive office or principal place of business; and

• maintain deposit accounts or securities accounts without account control agreements in place.

The covenants in our Term Loan may limit our ability to take certain actions and, in the event that we breach 

one or more covenants, the agent may, and at the direction of the lenders will, declare an event of default and 
require that we immediately repay all amounts outstanding, plus penalties and interest, terminate their commitments 
to extend further credit and foreclose on the collateral granted to them to secure such indebtedness. The exercise 
of remedies by the lenders would have a material adverse effect on our business, operating results and financial 
condition.

Our debt obligations expose us to risks that could adversely affect our business, operating results, 

overall financial condition and may result in further dilution to our stockholders.

Our Term Loan with Hercules obligates us to make certain interest and principal payments. Our ability to make 

payments on this indebtedness depends on our ability to generate cash in the future. We expect to experience 
negative cash flow for the foreseeable future as we fund our operations and capital expenditures. There can be no 
assurance we will be in a position to repay this indebtedness when due or obtain extensions to the maturity date. 
We anticipate that we will need to secure additional funding to repay these obligations when due. We cannot 
guarantee that future financing will be available in sufficient amounts or on terms acceptable to us, if at all. If that 
additional funding involves the sale of equity securities or convertible securities, it would result in the issuance of 
additional shares of our capital stock, which would result in dilution to our stockholders.

This level of debt could have an adverse impact on our business or operations. For example, it could:

•

•

•

•

limit our flexibility in planning for the development, clinical testing, approval and marketing of veverimer;

place us at a competitive disadvantage compared to any of our competitors that are less leveraged than we 
are;

increase our vulnerability to both general and industry-specific adverse economic conditions; and

limit our ability to obtain additional funds.

We will continue to incur significant costs as a result of operating as a public company, and our 

management will continue to devote substantial time to new compliance initiatives. We may fail to comply 
with the rules that apply to public companies, including Section 404 of the Sarbanes-Oxley Act of 2002, 
which could result in sanctions or other penalties that would harm our business.

We will continue to incur significant legal, accounting and other expenses as a public company, including costs 
resulting from public company reporting obligations under the Securities Exchange Act of 1934, as amended, or the 
Exchange Act, and regulations regarding corporate governance practices. Until December 31, 2018, we were 
eligible for reduced reporting and disclosure requirements as an “emerging growth company.” We are no longer an 
“emerging growth company” and, accordingly, we are required to comply with several supplemental requirements 
that will necessitate additional resources and management time and expense. The listing requirements of The 
Nasdaq Global Select Market require that we satisfy certain corporate governance requirements relating to director 
independence, distributing annual and interim reports, stockholder meetings, approvals and voting, soliciting 
proxies, conflicts of interest and a code of conduct. Our management and other personnel devote and will need to 
continue to devote a substantial amount of time to ensure that we comply with all of these requirements. Moreover, 
the reporting requirements, rules and regulations have increased our legal and financial compliance costs and will 
continue to make some activities more time consuming and costly. Any changes we make to comply with these 
obligations may not be sufficient to allow us to satisfy our obligations as a public company on a timely basis, or at 
all. These reporting requirements, rules and regulations, coupled with the increase in potential litigation exposure 
associated with being a public company, could also make it more difficult for us to attract and retain qualified 
persons to serve on our board of directors or board committees or to serve as executive officers, or to obtain certain 
types of insurance, including directors’ and officers’ insurance, on acceptable terms.

In addition, we implemented an enterprise resource planning, or ERP, system for our company. An ERP system 

is intended to combine and streamline the management of our financial, accounting, human resources, sales and 

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marketing and other functions, enabling us to manage operations and track performance more effectively. The 
ongoing process improvements of our ERP system may result in substantial costs. Additionally, in the future, we 
may be limited in our ability to convert any business that we acquire to the ERP. Any disruptions or difficulties in 
using an ERP system could adversely affect our controls and harm our business, including our ability to forecast or 
make sales and collect our receivables. Moreover, such disruption or difficulties could result in unanticipated costs 
and diversion of management attention.

Additionally, the Sarbanes-Oxley Act requires, among other things, that we maintain effective internal controls 
for financial reporting and disclosure controls and procedures. In particular, we are required to perform system and 
process evaluation and testing of our internal controls over financial reporting to allow management to report on the 
effectiveness of our internal controls over financial reporting, as required by Section 404(a) of the Sarbanes-Oxley 
Act. We are now also subject to the compliance requirements of Section 404(b) of the Sarbanes-Oxley Act, which 
has resulted in us incurring substantial expenses and expending significant management efforts to comply with the 
Act, which we will continue. We currently have only a limited internal audit group, and we will need to hire additional 
accounting and financial staff with appropriate public company experience and technical accounting knowledge. If 
we are not able to comply with the requirements of Section 404(b) or if we identify or our independent registered 
public accounting firm identifies deficiencies in our internal controls over financial reporting that are deemed to be 
material weaknesses, the market price of our stock could decline and we could be subject to sanctions or 
investigations by NASDAQ, the SEC, or other regulatory authorities, which would require additional financial and 
management resources.

Any collaboration arrangements that we may enter into in the future may not be successful, which could 

adversely affect our ability to develop and commercialize veverimer.

We may seek to establish collaboration or similar agreements with one or more established biotechnology, 

pharmaceutical or specialty pharmaceutical companies to support the development, regulatory approval and 
commercialization of veverimer outside of the United States and we may seek similar arrangements for the 
development or commercialization of veverimer in the United States. We may enter into these arrangements on a 
selective basis depending on the merits of retaining commercialization rights for ourselves as compared to entering 
into selective collaboration arrangements with leading pharmaceutical or biotechnology companies for veverimer, 
both in the United States and internationally. We will face, to the extent that we decide to enter into collaboration 
agreements, significant competition in seeking appropriate collaborators. Moreover, collaboration arrangements are 
complex and time consuming to negotiate, document and implement. We may not be successful in our efforts to 
establish and implement collaborations or other alternative arrangements should we so chose to enter into such 
arrangements. The terms of any collaborations or other arrangements that we may establish may not be favorable 
to us.

Any future collaborations that we enter into may not be successful. The success of our collaboration 

arrangements will depend heavily on the efforts and activities of our collaborators. Collaborators generally have 
significant discretion in determining the efforts and resources that they will apply to these collaborations.

Disagreements between parties to a collaboration arrangement regarding clinical development and 

commercialization matters can lead to delays in the development process or commercializing the applicable product 
candidate and, in some cases, termination of the collaboration arrangement. These disagreements can be difficult 
to resolve if neither of the parties has final decision-making authority.

Collaborations with pharmaceutical or biotechnology companies and other third parties often are terminated or 
allowed to expire by the other party. If we were to enter into any collaboration agreements, any such termination or 
expiration would adversely affect us financially and could harm our business reputation.

If we engage in acquisitions, we will incur a variety of costs and we may never realize the anticipated 

benefits of such acquisitions.

Although we currently have no intent to do so, we may attempt to acquire businesses, technologies, services, 

products or product candidates that we believe are a strategic fit with our business. If we do undertake any 
acquisitions, the process of integrating an acquired business, technology, service, products or product candidates 
into our business may result in unforeseen operating difficulties and expenditures, including diversion of resources 
and management’s attention from our core business. In addition, we may fail to retain key executives and 
employees of the companies we acquire, which may reduce the value of the acquisition or give rise to additional 
integration costs. Future acquisitions could result in additional issuances of equity securities that would dilute the 

60

ownership of existing stockholders. Future acquisitions could also result in the incurrence of debt, contingent 
liabilities or the amortization of expenses related to other intangible assets, any of which could adversely affect our 
operating results. In addition, we may fail to realize the anticipated benefits of any acquisition.

Our business involves the use of hazardous materials and we and our third-party manufacturers and 
suppliers must comply with environmental laws and regulations, which can be expensive and restrict how 
we do business.

Our research and development activities and our third-party manufacturers’ and suppliers’ activities involve the 

controlled storage, use and disposal of hazardous materials, including the components of veverimer and other 
hazardous compounds. We and our manufacturers and suppliers are subject to laws and regulations governing the 
use, manufacture, storage, handling and disposal of these hazardous materials. In some cases, these hazardous 
materials and various wastes resulting from their use are stored at our and our manufacturers’ facilities pending 
their use and disposal. We cannot eliminate the risk of contamination, which could cause an interruption of our 
commercialization efforts, research and development efforts and business operations, environmental damage 
resulting in costly clean-up and liabilities under applicable laws and regulations governing the use, storage, handling 
and disposal of these materials and specified waste products. Although we believe that the safety procedures 
utilized by us and our third-party manufacturers for handling and disposing of these materials generally comply with 
the standards prescribed by these laws and regulations, we cannot guarantee that this is the case or eliminate the 
risk of accidental contamination or injury from these materials. In such an event, we may be held liable for any 
resulting damages and such liability could exceed our resources and state or federal or other applicable agencies 
may curtail our use of certain materials and/or interrupt our business operations. Furthermore, environmental laws 
and regulations are complex, change frequently and have tended to become more stringent. We cannot predict the 
impact of such changes and cannot be certain of our future compliance. We do not currently carry biological or 
hazardous waste insurance coverage.

Unfavorable global economic conditions could adversely affect our business, financial condition or 

results of operations.

Our results of operations could be adversely affected by general conditions in the global economy and in the 
global financial markets. The recent global financial crisis caused extreme volatility and disruptions in the capital 
and credit markets. A severe or prolonged economic downturn, such as the recent global financial crisis, could 
result in a variety of risks to our business, including reduced ability to raise additional capital when needed on 
acceptable terms, if at all. A weak or declining economy as well as unexpected changes in tariffs or trade barriers 
could also strain our suppliers, possibly resulting in supply disruption or increased prices. It may also harm our 
ability to attract and retain collaboration partners or customers. Additionally, currency fluctuations may affect our 
ability to successfully market and sell veverimer in markets outside of the United States. Any of the foregoing could 
harm our business and we cannot anticipate all of the ways in which the current or future economic climate and 
financial market conditions could adversely impact our business.

We or the third parties upon whom we depend may be adversely affected by earthquakes or other 
natural disasters and our business continuity and disaster recovery plans may not adequately protect us 
from a serious disaster.

Our corporate headquarters and other facilities are located in the San Francisco Bay Area, which in the past 

has experienced severe earthquakes. We do not carry earthquake insurance. Earthquakes or other natural 
disasters could severely disrupt our operations, and have a material adverse effect on our business, results of 
operations, financial condition and prospects.

If a natural disaster, power outage or other event occurred that prevented us from using all or a significant 

portion of our headquarters, that damaged critical infrastructure, such as our enterprise financial systems or 
manufacturing resource planning and enterprise quality systems, or that otherwise disrupted operations, it may be 
difficult or, in certain cases, impossible for us to continue our business for a substantial period of time. The disaster 
recovery and business continuity plans we have in place currently are limited and are unlikely to prove adequate in 
the event of a serious disaster or similar event. We may incur substantial expenses as a result of the limited nature 
of our disaster recovery and business continuity plans, which, particularly when taken together with our lack of 
earthquake insurance, could have a material adverse effect on our business.

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Furthermore, integral parties in our supply chain may operate from single sites, increasing their vulnerability to 
natural disasters or other sudden, unforeseen and severe adverse events. If such an event were to affect our supply 
chain, it could have a material adverse effect on our business.

Our internal computer systems, or those of our CROs or other contractors or consultants, may fail or 

suffer security breaches, which could result in material disruptions to our drug development programs.

Despite the implementation of security measures, our internal computer systems and those of our CROs and 
other contractors and consultants regularly must defend against cybersecurity or other business continuity risks, 
and are vulnerable to damage from computer viruses, cyber attacks, industrial espionage, other unauthorized 
access, natural disasters, terrorism, war and telecommunication and electrical failures. Such events could cause 
interruptions to our operations and result in material disruptions to our drug development programs. For example, 
the compromise, corruption, loss or theft of clinical trial data from completed or ongoing clinical trials for our product 
candidate could result in delays in our regulatory approval efforts and significantly increase our costs to recover or 
reproduce the data. To the extent that any disruption or security breach were to result in a compromise, corruption, 
loss or theft of or other damage to our data or applications, or inappropriate disclosure of confidential or proprietary 
information, we could incur liability and significant costs in remediating the incident, complying with regulatory 
requirements and defending against claims. Such events could also adversely affect our competitive position, our 
reputation could be harmed and the further development of our product candidate could be delayed.

We are subject to evolving privacy and data protection laws, including the EU GDPR, and the new 
California Consumer Protection Act, or CCPA. If we fail to comply with existing or future data protection 
regulations, our business, financial condition, results of operations and prospects may be materially 
adversely affected.

By virtue of our clinical trial activities in Europe, we are also subject to European data protection laws, including 

GDPR (as implemented by EU Member States and the UK). The GDPR which came into effect on May 25, 2018, 
establishes requirements applicable to the processing of personal data (i.e., data which identifies an individual or 
from which an individual is identifiable), affords various data protection rights to individuals (e.g., the right to erasure 
of personal data) and imposes potential penalties for serious breaches of up to 4.0% annual worldwide turnover or 
€20 million, whichever is greater. Individuals (e.g., study subjects) also have a right to compensation for financial or 
non-financial losses (e.g., distress). There may be circumstances under which a failure to comply with the GDPR, or 
the exercise of individual rights under the GDPR, would limit our ability to utilize clinical trial data collected on study 
subjects. The GDPR imposes additional responsibility and liability in relation to our processing of personal data. 
This may be onerous and materially adversely affect our business, financial condition, results of operations and 
prospects.

In addition, the interpretation and application of consumer, health-related and data protection laws in the United 

States, Europe and elsewhere are often uncertain, contradictory and in flux. It is possible that these laws may be 
interpreted and applied in a manner that is inconsistent with our practices. If so, this could result in government-
imposed fines or orders requiring that we change our practices, which could adversely affect our business. In 
addition, we are subject to various state laws, including the California Consumer Privacy Act, or CCPA, which went 
into effect on January 1, 2020. The CCPA now, among other things, requires covered companies to provide 
disclosures to California consumers concerning the collection and sale of personal information, and gives such 
consumers certain qualified privacy rights, including the right to opt-out of certain sales of personal information. 
Amendments to the CCPA have been made since its enactment, implementing regulations are not yet finalized, 
certain provisions of the law will sunset at the end of 2020, and it remains unclear what, if any, further amendments 
will be made to this legislation or how it will be interpreted. Similarly, we are following the development of new data 
laws in Washington State, in Washington D.C., and around the country. We cannot yet predict the impact of the 
CCPA or other potential new laws on our business or operations, but it may require us to modify our data 
processing practices and policies and to incur substantial costs and expenses in an effort to comply.

Risks Related to Government Regulation

The regulatory approval process is highly uncertain and we may not obtain approval through the 
Accelerated Approval Program or the conventional pathway, as required for the commercialization of 
veverimer.

The research, testing, manufacturing, labeling, approval, selling, import, export, pricing and reimbursement, 
marketing and distribution of drug products are subject to extensive regulation by the FDA and other regulatory 

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agencies in the United States and other countries, which regulations differ from country to country. Neither we nor 
any future collaboration partner is permitted to market veverimer in the United States until we receive approval of 
our NDA from the FDA. We have not obtained marketing approval for veverimer anywhere in the world. Obtaining 
regulatory approval of our NDA, even through the Accelerated Approval Program, can be a lengthy, expensive and 
uncertain process. In addition, failure to comply with FDA and other applicable U.S. and foreign regulatory 
requirements may subject us to administrative or judicially imposed sanctions or other actions, including:

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•

•

•

•

•

•

warning letters;

civil and criminal penalties;

injunctions;

withdrawal of regulatory approval of products;

product seizure or detention;

product recalls;

total or partial suspension of production; and

refusal to approve pending NDAs or supplements to approved NDAs, or foreign regulatory equivalents.

Prior to obtaining approval to commercialize a drug candidate in the United States or abroad, we or our 

collaborators must demonstrate with substantial evidence from well-controlled clinical trials, and to the satisfaction 
of the FDA or other foreign regulatory agencies, that such drug candidates are safe and effective for their intended 
uses. The number of nonclinical and clinical studies and trials that will be required for FDA approval varies 
depending on the drug candidate, the disease or condition that the drug candidate is designed to address, and the 
regulations applicable to any particular drug candidate. We are seeking approval for veverimer through the FDA’s 
Accelerated Approval Program, which would allow us to demonstrate an effect on a surrogate endpoint that is 
reasonably likely to predict veverimer’s clinical benefit, but we will be subject to rigorous postmarketing 
requirements, including the completion of one or more confirmatory postmarketing trials to verify the clinical benefit 
of veverimer. If the FDA is not satisfied that we are diligently conducting our confirmatory postmarketing trial, 
VALOR-CKD, it may affect the timing of the potential approval of veverimer by the FDA. If we are unable to obtain 
approval through the Accelerated Approval Program, we will have to pursue a conventional approval pathway for 
veverimer. In addition, in such case, the FDA could determine that our pivotal Phase 3 clinical trial, TRCA-301, may 
not be sufficient to support approval through the conventional pathway. Results from nonclinical and clinical trials 
and studies can be interpreted in different ways. Even if we believe the nonclinical or clinical data for our drug 
candidate is promising, such data may not be sufficient to support approval by the FDA and other regulatory 
agencies. Administering drug candidates to humans may produce undesirable side effects, which could interrupt, 
delay or halt clinical trials and result in the FDA or other regulatory agencies denying approval of a drug candidate 
for any or all targeted indications.

Both accelerated and conventional regulatory approval pathways of an NDA or NDA supplement are not 
guaranteed, and the approval process is expensive and may take several years. The FDA also has substantial 
discretion in the approval process and we may encounter matters with the FDA that require us to expend additional 
time and resources and delay or prevent the approval of our product candidate. For example, the FDA may require 
us to conduct additional studies or trials for veverimer either prior to approval or postmarketing, such as additional 
drug-drug interaction studies or safety or efficacy studies or trials, or it may object to elements of our clinical 
development program such as the number of subjects enrolled in our current clinical trials from the United States. 
Despite the time and expense exerted, failure can occur at any stage. The FDA can delay, limit or deny approval of 
a drug candidate for many reasons, including, but not limited to, the following:

•

•

•

•

a drug candidate may not be deemed safe or effective;

the FDA might not approve our trial design and analysis plan;

the FDA may not find the data from nonclinical and clinical studies and trials sufficient;

clinical inspection(s) by the FDA or other regulatory authorities may result in unacceptable findings that 
could negatively impact approval of veverimer;

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•

the FDA might not accept or deem acceptable a third-party manufacturers’ processes or facilities; or

the FDA may change its approval policies or adopt new regulations.

If veverimer fails to demonstrate safety and efficacy in clinical trials or does not gain regulatory approval, our 
business and results of operations will be materially and adversely harmed. Additionally, if the FDA requires that we 
conduct additional clinical trials, places limitations on veverimer in our label, delays approval to market veverimer or 
limits the use of veverimer, our business and results of operations may be harmed.

We have initiated and are enrolling subjects in our confirmatory postmarketing trial, VALOR-CKD. The 

VALOR-CKD trial design may be impacted by clinical data generated while the VALOR-CKD trial is ongoing, 
including data that may affect key assumptions regarding sample size, endpoints, duration or the underlying 
standard of care, in which case we may be required to modify our planned clinical trials, or conduct 
additional clinical trials.

If clinical data generated while the VALOR-CKD trial is ongoing, including data that may affect key assumptions 
regarding sample size, endpoints, duration or the underlying standard of care, impacts the VALOR-CKD trial design, 
we may be required to modify our planned clinical trials, or conduct additional clinical trials, before we can obtain 
regulatory approval from the FDA or comparable foreign authorities, and any such modification or additional trial 
could have a material adverse effect on our expected clinical and regulatory timelines, business, prospects, 
financial condition and results of operations.

Because we are developing a product candidate for the treatment of a disease or condition on the basis 
of an unvalidated surrogate endpoint, there are increased risks that the FDA or other regulatory authorities 
may find that our clinical program provides insufficient evidence of clinical benefit, may have difficulty 
analyzing and interpreting the results of our clinical program, and may delay or refuse to approve veverimer.

There are no FDA-approved therapies for the chronic treatment of patients with metabolic acidosis and CKD. In 

addition, we are not aware of any chronic therapeutic agent that has previously been approved by the FDA on the 
basis of a clinical trial that used serum bicarbonate level as the primary endpoint. We have engaged in discussions 
with the FDA regarding the design of our pivotal Phase 3 clinical trial, TRCA-301, and whether the use of serum 
bicarbonate as a surrogate endpoint is reasonably likely to predict clinical benefit. However, the FDA has discretion 
at any time, including during our NDA review, to determine whether there is support for the use of serum 
bicarbonate as a surrogate endpoint.

Key issues with our endpoint include uncertainty about the degree of change from baseline serum bicarbonate 
that will translate into improved clinical outcomes, the population in which such change is expected to translate into 
improved clinical outcomes, and the need for data supporting a causal relationship between serum bicarbonate 
concentration and clinical outcomes. As a result, we cannot be certain that FDA will ultimately conclude that the 
design and results of our pivotal Phase 3 clinical trial, TRCA-301, which uses changes from baseline in serum 
bicarbonate level as the primary endpoint, and our 40-week extension study, TRCA-301E, or that the design of the 
VALOR-CKD trial, will be sufficient for approval of veverimer.

Moreover, even if the FDA does find that changes from baseline in serum bicarbonate are sufficiently likely to 
predict clinical benefit for patients, the FDA may not agree that we have achieved the primary endpoint in our pivotal 
Phase 3 clinical trial, TRCA-301, to the magnitude or to the degree of statistical significance required by the FDA. 
Further, even if those requirements are satisfied, the FDA also could give overriding weight to inconsistent or 
otherwise confounding results on other efficacy endpoints or other results of the trial, including results on secondary 
and exploratory endpoints. The FDA also weighs the benefits of a product against its risks and the FDA may view 
the efficacy results in the context of safety as not being supportive of regulatory approval. Regulatory authorities in 
other countries may take similar positions.

We are conducting and may in the future conduct clinical trials for our product candidate, veverimer, 

outside the United States and the FDA may not accept data from such trials.

Although the FDA may accept data from clinical trials conducted outside the United States in support of safety 
and efficacy claims for veverimer, this is subject to certain conditions. For example, such foreign clinical trials should 
be conducted in accordance with GCPs, including review and approval by an independent ethics committee and 
obtaining the informed consent from subjects of the clinical trials. The foreign clinical data should also be applicable 
to the U.S. population and U.S. medical practice. Other factors that may affect the acceptance of foreign clinical 

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data include differences in clinical conditions, study populations or regulatory requirements between the United 
States and the foreign country.

We conducted the TRCA-101, TRCA-301 and TRCA-301E trials, and are conducting the VALOR-CKD trial with 
majority enrollment outside the United States and may, in the future, conduct clinical trials of our product candidates 
outside the United States. The FDA may not accept such foreign clinical data, and in such event, we may be 
required to re-conduct the relevant clinical trials within the United States, which would be costly and time-
consuming, and which could have a material and adverse effect on our ability to carry out our business plans.

Even if we receive regulatory approval for veverimer, we will be subject to ongoing regulatory 

obligations and continued regulatory review, which may result in significant additional expense. 
Additionally, veverimer, if approved, could be subject to labeling and other restrictions and market 
withdrawal, and we may be subject to penalties if we fail to comply with regulatory requirements or 
experience unanticipated problems with veverimer.

Even if a drug is approved by the FDA and/or foreign regulatory agencies, regulatory agencies may still impose 

significant restrictions on a product’s indicated uses or marketing or impose various ongoing requirements. 
Furthermore, any new legislation addressing drug safety issues could result in delays or increased costs to assure 
compliance. In addition, if a drug receives approval through the FDA’s Accelerated Approval Program, it will be 
subject to special postmarketing requirements, including the completion of confirmatory postmarketing clinical trials 
to verify the clinical benefit of the product, and submission to the FDA of all promotional materials prior to their 
dissemination. The FDA could seek to withdraw the approval for multiple reasons, including if we fail to conduct any 
required confirmatory postmarketing trial with due diligence, a confirmatory postmarketing trial does not confirm the 
predicted clinical benefit, other evidence shows that the product is not safe or effective under the conditions of use, 
or we disseminate promotional materials that are found by the FDA to be false and misleading.

If veverimer receives approval through the Accelerated Approval Program, it will be subject to ongoing 
regulatory requirements for conducting postmarketing clinical studies and trials, labeling, packaging, storage, 
advertising, promotion, sampling, record-keeping and submission of safety and other post-market information, 
including both federal and state requirements in the United States. In addition, manufacturers and manufacturers’ 
facilities are required to comply with extensive FDA requirements, including ensuring that quality control and 
manufacturing procedures conform to cGMP. As such, we and our contract manufacturers are subject to continual 
review and periodic inspections to assess compliance with cGMP. Accordingly, we must conduct the confirmatory 
postmarketing trial in a diligent manner and we and others with whom we work must continue to expend time, 
money, and effort in all areas of regulatory compliance, including manufacturing, production, and quality control. We 
will also be required to report certain adverse reactions and production problems, if any, to the FDA, and to comply 
with requirements concerning advertising and promotion for veverimer. Promotional communications with respect to 
prescription drugs are subject to a variety of legal and regulatory restrictions and must be consistent with the 
information in the product’s approved label. As such, we may not promote veverimer for indications or uses for 
which it does not have FDA approval.

If veverimer receives approval through the Accelerated Approval Program but we fail to conduct the required 
confirmatory postmarketing trials with due diligence or such postmarketing trials fail to confirm veverimer’s clinical 
profile or risks and benefits, the FDA may withdraw its approval. If a regulatory agency discovers previously 
unknown problems with veverimer, such as adverse events of unanticipated severity or frequency, or problems with 
the facility where the product is manufactured, or disagrees with the promotion, marketing, or labeling of a product, 
the regulatory agency may impose restrictions on the product or us, including requiring withdrawal of the product 
from the market. If we fail to comply with applicable regulatory requirements, a regulatory agency or enforcement 
authority may:

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•

•

issue warning letters;

impose civil or criminal penalties;

suspend regulatory approval;

suspend any of our ongoing clinical trials;

refuse to approve pending applications or supplements to approved applications submitted by us;

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impose restrictions on our operations, including closing our contract manufacturers’ facilities; or

seize or detain products or require a product recall.

Any government investigation of alleged violations of law could require us to expend significant time and 

resources in response and could generate negative publicity. Any failure to comply with ongoing regulatory 
requirements may significantly and adversely affect our ability to commercialize and generate revenue from 
veverimer. If regulatory sanctions are applied or if regulatory approval is withdrawn, the value of our company and 
our operating results will be adversely affected. Additionally, if we are unable to generate revenue from the sale of 
veverimer our potential for achieving profitability will be diminished and the capital necessary to fund our operations 
will be increased.

The regulatory requirements and policies may change, and additional government regulations may be enacted 

for which we may also be required to comply. We cannot predict the likelihood, nature or extent of government 
regulation that may arise from future legislation or administrative action, either in the United States or in other 
countries. If we or any future collaboration partner are not able to maintain regulatory compliance, we or such 
collaboration partner, as applicable, may face government enforcement action and our business will suffer.

We are seeking regulatory approval to market veverimer for the treatment of metabolic acidosis and 
slowing of kidney disease progression in patients with metabolic acidosis and CKD and, unless we seek 
regulatory approval for additional indications, we will be prohibited from marketing veverimer for other 
indications.

We are seeking FDA approval to market veverimer for the treatment of metabolic acidosis and slowing of kidney 

disease progression in patients with metabolic acidosis and CKD, but we cannot be certain what indication and 
what labeling language will be approved for veverimer, if approved, until our NDA is reviewed and potentially as late 
as approval. If veverimer is approved through the Accelerated Approval Program, the indications and usage section 
of the label is likely to include a statement that clinical benefit of veverimer has not yet been established and that 
continued approval may be contingent upon demonstration of clinical benefit in a confirmatory postmarketing trial. 
The FDA strictly regulates the promotional claims that may be made about prescription products, and veverimer 
may not be promoted for uses that are not approved by the FDA as reflected in its approved labeling. Under 
applicable regulations, promoting uses that are not reflected in the FDA-approved labeling, referred to as “off-label” 
marketing, is prohibited. If we are found to have promoted such off-label uses, we may become subject to 
significant liability.

If we fail to comply or are found to have failed to comply with FDA and other laws and regulations 
related to the promotion of veverimer for unapproved uses, we could be subject to criminal penalties, 
substantial fines or other sanctions and damage awards.

The regulations relating to the promotion of products for unapproved uses are complex and subject to 
substantial interpretation by the FDA and other government agencies. If we receive marketing approval for 
veverimer, physicians may nevertheless prescribe it to their patients in a manner that is inconsistent with the 
approved label. We intend to implement compliance and training programs designed to ensure that our sales and 
marketing practices comply with applicable laws and regulations. Notwithstanding these programs, the FDA or other 
government agencies may allege or find that our practices constitute prohibited promotion of veverimer for 
unapproved uses. We also cannot be sure that our employees or contracted agents will comply with company 
policies and applicable regulations regarding the promotion of products for unapproved uses.

Over the past several years, a significant number of pharmaceutical and biotechnology companies have been 

the target of inquiries and investigations by various federal and state regulatory, investigative, prosecutorial and 
administrative entities in connection with the promotion of products for unapproved uses and other sales practices, 
including the Department of Justice and various U.S. Attorneys’ Offices, the Office of Inspector General of the 
Department of Health and Human Services, the FDA, the Federal Trade Commission and various state Attorneys 
General offices. These investigations have alleged violations of various federal and state laws and regulations, 
including claims asserting antitrust violations, violations of the FFDCA, the federal civil False Claims Act, or FCA, 
the Prescription Drug Marketing Act, the criminal Anti-Kickback Statute, and other alleged violations in connection 
with the promotion of products for unapproved uses and government reimbursement (e.g. Medicare and/or 
Medicaid). Many of these investigations originate as “qui tam” actions under the FCA. Under the FCA, any individual 
can bring a claim on behalf of the government alleging that a person or entity has presented a false claim, or 
caused a false claim to be submitted, to the government for payment. The person bringing a qui tam suit is entitled 

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to a share of any recovery or settlement. Qui tam suits, also commonly referred to as “whistleblower suits,” are often 
brought by current or former employees. In a qui tam suit, the government must decide whether to intervene and 
prosecute the case. If it declines, the individual may pursue the case alone.

If the FDA or any other governmental agency initiates an enforcement action against us or if we are the subject 

of a qui tam suit and it is determined that we violated prohibitions relating to the promotion of products for 
unapproved uses, or other applicable prohibitions, we could be subject to substantial civil or criminal fines or 
damage awards and other sanctions such as consent decrees and corporate integrity agreements pursuant to 
which our activities would be subject to ongoing scrutiny and monitoring to ensure compliance with applicable laws 
and regulations. Individuals can also be subject to imprisonment, and we can be excluded from participating in 
federal health care programs, such as Medicare and Medicaid, which means our products may not be reimbursed 
by federal healthcare programs and other entities that participate in federal healthcare programs cannot contract 
with us. Any such exclusions, fines, awards or other sanctions would have an adverse effect on our revenue, 
business, financial prospects and reputation.

If approved, veverimer may cause or contribute to adverse medical events that we are required to report 

to regulatory agencies and if we fail to do so we could be subject to sanctions that would materially harm 
our business.

The most commonly reported adverse effects experienced by more patients on veverimer than placebo in the 
TRCA-101, TRCA-301 and TRCA-301E trials combined were mild to moderate diarrhea and flatulence. If we are 
successful in commercializing veverimer, FDA and most foreign regulatory agency regulations require that we report 
certain information about adverse medical events if the product may have caused or contributed to those adverse 
events. The timing of our obligation to report would be triggered by the date we become aware of the adverse event 
as well as the nature of the event. We may fail to report adverse events we become aware of within the prescribed 
timeframe. We may also fail to appreciate that we have become aware of a reportable adverse event, especially if it 
is not reported to us as an adverse event or if it is an adverse event that is unexpected or removed in time from the 
use of veverimer. If we fail to comply with our reporting obligations, the FDA or a foreign regulatory agency could 
take action, including criminal prosecution, the imposition of civil monetary penalties, and seizure of our products.

If third-party manufacturers fail to comply with manufacturing regulations, our financial results and 

financial condition will be adversely affected.

Before commercial distribution of veverimer, contract manufacturers may be inspected to determine 

acceptability by FDA or foreign regulatory agencies for their manufacturing facilities, processes and quality systems, 
as part of the NDA approval. In addition, pharmaceutical manufacturing facilities are subject to inspection by the 
FDA and foreign regulatory agencies on a regular basis, before and after product approval. Due to the complexity of 
the processes used to manufacture pharmaceutical products and product candidates, any potential third-party 
manufacturer may be unable to continue to pass or initially pass federal, state or international regulatory inspections 
in a cost-effective manner.

If a third-party manufacturer with whom we contract is unable to comply with manufacturing regulations, 

veverimer may not be approved, or we may be subject to fines, unanticipated compliance expenses, recall or 
seizure of our products, total or partial suspension of production and/or enforcement actions, including injunctions, 
and criminal or civil prosecution. These possible sanctions would adversely affect our financial results and financial 
condition.

We are seeking regulatory approval to market veverimer in the United States. If we want to expand the 

geographies in which we may market veverimer, we will need to obtain additional regulatory approvals.

We are seeking regulatory approval for veverimer in the United States. In the future, we may attempt to develop 

and seek regulatory approval to promote and commercialize veverimer outside of the United States. In order to 
obtain such approvals, we may be required to conduct additional clinical trials or studies to support our applications, 
which would be time consuming and expensive, and may produce results that do not result in regulatory approvals. 
Further, we will have to expend substantial time and resources in order to establish the commercial infrastructure or 
pursue a collaboration arrangement that would be necessary to promote and commercialize veverimer outside of 
the United States. If we do not obtain regulatory approvals for veverimer in foreign jurisdictions, our ability to expand 
our business outside the United States will be severely limited.

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Our failure to obtain regulatory approvals in foreign jurisdictions for veverimer would prevent us from 

marketing our products internationally.

In order to market any product in the European Economic Area, or EEA (which is composed of the 27 Member 

States of the European Union plus Norway, Iceland and Liechtenstein), and many other foreign jurisdictions, 
separate regulatory approvals are required. In the EEA, medicinal products can only be commercialized after 
obtaining a Marketing Authorization. Before granting a Marketing Authorization, the competent agencies of the 
Member States of the EEA make an assessment of the risk-benefit balance of the product on the basis of scientific 
criteria concerning its quality, safety and efficacy.

It is unclear exactly how the United Kingdom’s exit of the European Union may affect the recognition of 
European-wide marketing authorizations by the United Kingdom, as this will be dependent on the outcome of 
ongoing negotiations between the European Union and the United Kingdom during the transition period which is 
expected to terminate on December 31, 2020.  

The approval procedures vary among countries and can involve additional nonclinical and clinical testing, and 
the time required to obtain approval may differ from that required to obtain FDA approval. Clinical trials conducted in 
one country may not be accepted by regulatory agencies in other countries. Approval by the FDA does not ensure 
approval by regulatory agencies in other countries, and approval by one or more foreign regulatory agencies does 
not ensure approval by regulatory agencies in other foreign countries or by the FDA. However, a failure or delay in 
obtaining regulatory approval in one country may have a negative effect on the regulatory process in others. The 
foreign regulatory approval process may include all of the risks associated with obtaining FDA approval. We may 
not be able to file for regulatory approvals or to do so on a timely basis, and, even if we do file, we may not receive 
necessary approvals to commercialize veverimer in any market. If we do not obtain regulatory approvals for 
veverimer in foreign jurisdictions, our ability to expand our business outside the United States will be severely 
limited.

We may be subject to healthcare laws, regulation and enforcement; our failure to comply with these laws 

or regulations, or our potential involvement in enforcement activities, could have a material adverse effect 
on our results of operations and financial conditions.

Although we do not currently have any products on the market, we are subject to a variety of regulatory 

requirements, including healthcare statutory and regulatory requirements and enforcement by the U.S. federal and 
state governments and the foreign governments of the countries in which we conduct our business. Even though we 
are not in a position to make patient referrals and do not bill Medicare, Medicaid, or other government or 
commercial third-party payers, the federal and state healthcare fraud and abuse laws and regulations may be 
applicable to our business. The healthcare regulatory laws that affect our current and future operations include, 
among others:

•

the federal Anti-Kickback Statute, which is a criminal law that prohibits, among other things, any person 
from knowingly and willfully soliciting, receiving, offering or paying remuneration, directly or indirectly, in 
cash or in kind, to induce or reward referrals, purchases, orders, or arranging for or recommending the 
purchase, order, or referral of any item or service for which payment may be made in whole or in part by a 
federal healthcare program, such as the Medicare and Medicaid programs. The term “remuneration” has 
been broadly interpreted to include anything of value. The Patient Protection and Affordable Care Act, or 
PPACA, among other things, amended the intent requirement of the federal Anti-Kickback Statute, so that a 
person or entity no longer needs to have actual knowledge of this statute or specific intent to violate it. The 
Anti-Kickback Statute has been interpreted to apply to arrangements between pharmaceutical 
manufacturers on the one hand and individuals, such as prescribers, patients, purchasers, and formulary 
managers on the other the other hand. A conviction for violation of the Anti-Kickback Statute results in 
criminal fines and requires mandatory exclusion from participation in federal health care programs. Although 
there are a number of statutory exceptions and regulatory safe harbors to the federal Anti-Kickback Statute 
that protect certain common, industry practices from prosecution, the exceptions and safe harbors are 
drawn narrowly, and arrangements may be subject to scrutiny or penalty if they do not fully satisfy all 
elements of an available exception or safe harbor. The Anti-Kickback Statute safe harbors, including, 
among others, the discount safe harbor, are the subject of possible reform. Any changes to the safe harbors 
may impact how we contract with customers in the future and impact our future pricing strategies with 
payers;

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•

•

•

•

•

federal civil and criminal false claims laws and civil monetary penalty laws, such as the FCA, which imposes 
significant penalties and can be enforced by private citizens through civil qui tam (or “whistleblower”) 
actions, prohibits individuals or entities from, among other things, knowingly presenting, or causing to be 
presented claims to the government that are false or fraudulent, or knowingly making, using or causing to 
be made or used a false record or statement material to a false or fraudulent claim to avoid, decrease or 
conceal an obligation to pay money to the federal government. FCA liability is potentially significant in the 
healthcare industry because the statute provides for treble damages and mandatory penalties of $11,181 to 
$22,363 per false claim or statement for penalties assessed after January 29, 2018, with respect to 
violations occurring after November 2, 2015. For example, among other things, pharmaceutical companies 
have been prosecuted under the FCA in connection with their alleged off-label promotion of drugs, 
purportedly concealing price concessions in the pricing information submitted to the government for 
government price reporting purposes (e.g., under the Medicaid Drug Rebate Program), and allegedly 
providing free product to customers with the expectation that the customers would bill federal health care 
programs for the product. In addition, the government may assert that a claim including items or services 
resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for 
purposes of the FCA. As a result of a modification made by the Fraud Enforcement and Recovery Act of 
2009, a claim includes “any request or demand” for money or property presented to the U.S. government. 
Manufacturers can be held liable under the FCA even when they do not submit claims directly to 
government payers if they are deemed to “cause” the submission of false or fraudulent claims. Criminal 
prosecution is also possible for making or presenting a false or fraudulent claim to the federal government;

the federal Health Insurance Portability and Accountability Act of 1996, as amended by the Health 
Information Technology for Economic and Clinical Health Act, or HITECH, and its implementing regulations, 
or collectively, HIPAA, which imposes privacy, security and breach reporting obligations with respect to 
individually identifiable health information upon entities subject to the law, such as health plans, healthcare 
clearinghouses and healthcare providers and their respective business associates that perform services for 
them that involve individually identifiable health information. HITECH also created tiers of civil monetary 
penalties, amended HIPAA to make civil and criminal penalties directly applicable to business associates, 
and gave state attorneys general new authority to file civil actions for damages or injunctions in U.S. federal 
courts to enforce the federal HIPAA laws and seek attorneys’ fees and costs associated with pursuing 
federal civil actions; 

under the HIPAA criminal federal healthcare fraud statute, it is a crime to knowingly and willfully execute, or 
attempt to execute, a scheme or artifice to defraud any health care benefit program or to obtain, by means 
of false or fraudulent pretenses, representations, or promises, any of the money or property owned by, or 
under the custody or control of, any health care benefit program, in connection with the delivery of or 
payment for health care benefits, items, or services;

U.S. and European reporting requirements detailing interactions with and payments to healthcare providers, 
such as the U.S. federal Physician Payments Sunshine Act, which requires, among others, “applicable 
manufacturers” of drugs, devices, biologics and medical supplies reimbursed under Medicare, Medicaid, or 
the Children’s Health Insurance Program to annually report to the Department of Health and Human 
Services, Centers for Medicare and Medicaid Services, information related to payments and other transfers 
of value provided to “covered recipients.” The term covered recipients includes U.S.-licensed physicians 
and teaching hospitals, and, for reports submitted on or after January 1, 2022, physician assistants, nurse 
practitioners, clinical nurse specialists, certified nurse anesthetists, and certified nurse-midwives. In 
addition, several U.S. states and localities have enacted legislation requiring pharmaceutical companies to 
establish marketing compliance programs, file periodic reports, and/or make periodic public disclosures on 
sales, marketing, pricing, clinical trials, and other activities. Failure to submit required information may result 
in civil monetary penalties; and

state and foreign laws that require pharmaceutical companies to implement compliance programs, comply 
with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance 
promulgated by the federal government, foreign governments or governmental bodies, or to track and report 
gifts, compensation and other remuneration provided to physicians and other health care providers, and 
several recently passed state laws that require disclosures to state agencies and/or commercial purchasers 
with respect to certain price increases that exceed a certain level as identified in the relevant statutes; and

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•

state law equivalents of each of the above federal laws, such as the Anti-Kickback Statute and FCA which 
may apply to items or services reimbursed by any third-party payers, including commercial insurers (i.e., so-
called “all-payor anti-kickback laws”), as well as state laws that govern the privacy and security of health 
information or personally identifiable information in certain circumstances, including state health information 
privacy and data breach notification laws which govern the collection, use, disclosure, and protection of 
health-related and other personal information, many of which differ from each other in significant ways and 
often are not pre-empted by HIPAA, thus requiring additional compliance efforts.

In addition, the approval and commercialization of veverimer outside the United States will also likely subject us 
to foreign equivalents of the healthcare laws mentioned above, among other foreign laws. Any action against us for 
violation of these laws, even if we successfully defend against it, could cause us to incur significant legal expenses 
and divert our management’s attention from the operation of our business.

In addition, federal and state governments are active in regulating payments made by manufacturers to 

physicians. Some states mandate implementation of compliance programs and/or the tracking and reporting of gifts, 
compensation, and other remuneration to physicians. The evolving enforcement environment and the need to build 
and maintain robust and expandable systems to comply with multiple jurisdictions with different compliance and/or 
reporting requirements increases the possibility that a healthcare company may run afoul of one or more of the 
requirements.

Ensuring that our business arrangements with third parties comply with applicable healthcare laws and 

regulations will likely be costly. If our operations are found to be in violation of any of the laws described above or 
any other governmental laws and regulations that apply to us, we may be subject to penalties, including civil, 
administrative and criminal penalties, damages, and fines; the curtailment or restructuring of our operations; 
contractual damages; disgorgement; reputational harm; additional oversight and reporting obligations pursuant to a 
corporate integrity agreement or similar agreement to resolve allegations of non-compliance with these laws; 
exclusion from participation in federal and state healthcare programs; and individual imprisonment, any of which 
could adversely affect our ability to market veverimer, if approved, and adversely impact our financial results. The 
risk of our being found in violation of these laws is increased by the fact that many of them have not been fully 
interpreted by the applicable regulatory agencies or the courts, and their provisions are open to a variety of 
interpretations.

Legislative or regulatory FDA reforms in the United States may make it more difficult and costly for us to 

obtain regulatory clearance or approval of veverimer and to produce, market and distribute our products 
after clearance or approval is obtained.

From time to time, legislation is drafted and introduced in Congress that could significantly change the statutory 
provisions governing the regulatory clearance or approval, manufacture, and marketing of regulated products or the 
reimbursement thereof. In addition, FDA regulations and guidance are often revised or reinterpreted by the FDA in 
ways that may significantly affect our business and our products. Any new regulations or revisions or 
reinterpretations of existing regulations may impose additional costs or lengthen review times of veverimer. We 
cannot determine what effect changes in regulations, statutes, legal interpretation or policies, when and if 
promulgated, enacted or adopted may have on our business in the future. Such changes could, among other things, 
require: 

•

•

•

•

additional clinical trials to be conducted prior to obtaining approval;

changes to manufacturing methods;

recall, replacement, or discontinuance of veverimer; and

additional record keeping.

Each of these would likely entail substantial time and cost and could materially harm our business and our 
financial results. In addition, delays in receipt of or failure to receive regulatory clearances or approvals would harm 
our business, financial condition and results of operations.

Further, the United States and some foreign jurisdictions have enacted or are considering a number of 

legislative and regulatory proposals to change the healthcare system in ways that could affect our ability to sell our 
products, if approved, and profitably. Among policy makers and payers in the United States and elsewhere, there is 

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significant interest in promoting changes in healthcare systems with the stated goals of containing healthcare costs, 
improving quality and expanding access.

In the United States, the pharmaceutical industry has been a particular focus of these efforts and has been 

significantly affected by major legislative initiatives, including the PPACA, which contains provisions that may 
potentially reduce the profitability of products, including, for example, increased rebates for products sold to 
Medicaid programs, extension of Medicaid rebates to Medicaid managed care plans, mandatory discounts for 
certain Medicare Part D beneficiaries and annual fees based on pharmaceutical companies’ share of sales to 
federal health care programs. There have been ongoing judicial and Congressional challenges to the PPACA, as 
well as efforts by the Trump administration to repeal or replace certain aspects of the PPACA. Since January 2017, 
President Trump has signed at least two Executive Orders and other directives designed to delay the 
implementation of certain provisions of the PPACA or otherwise circumvent some of the requirements for health 
insurance mandated by the PPACA. While Congress has not passed comprehensive repeal legislation, two bills 
affecting the implementation of certain taxes under the PPACA have been signed into law, including the repeal, 
effective January 1, 2019, of the tax-based shared responsibility payment imposed by the PPACA on certain 
individuals who fail to maintain qualifying health coverage for all or part of a year that is commonly referred to as the 
“individual mandate.” Although two courts have ruled that this repeal renders the individual mandate 
unconstitutional, this decision is subject to further appeal and the courts are continuing to assess whether this 
means that the PPACA as a whole is unconstitutional. Additionally, on January 22, 2018, President Trump signed a 
continuing resolution on appropriations for fiscal year 2018 that delayed the implementation of certain fees 
mandated by the PPACA, including the so-called “Cadillac” tax on certain high cost employer-sponsored insurance 
plans, the annual fee imposed on certain health insurance providers based on market share, and the medical 
device excise tax on non-exempt medical devices. Moreover, the Bipartisan Budget Act of 2018, among other 
things, amends the PPACA, effective January 1, 2019, to increase from 50% to 70% the point-of-sale discount to 
eligible beneficiaries during their coverage gap period that is owed by pharmaceutical manufacturers who 
participate in Medicare Part D and to close the coverage gap in most Medicare drug plans, commonly referred to as 
the “donut hole.” In the future, there may be additional challenges and amendments to the PPACA. It remains to be 
seen precisely what new legislation will provide, when it will be enacted, and what impact it will have on the 
availability of healthcare and containing or lowering the cost of healthcare, including the cost of pharmaceutical 
products.

Additionally, there has been increasing legislative and enforcement interest in the United States with respect to 
drug pricing practices. Specifically, there have been several recent U.S. Congressional inquiries and proposed and 
enacted federal and state legislation designed to, among other things, lower drug pricing, bring more transparency 
to drug pricing, review the relationship between pricing and manufacturer patient programs, and reform government 
program reimbursement methodologies for drugs. While any proposed measures will require authorization through 
additional legislation to become effective, Congress and the Trump administration have each indicated that it will 
continue to seek new legislative and/or administrative measures to control drug costs. At the state level, legislatures 
are increasingly passing legislation and implementing regulations designed to control pharmaceutical and biological 
product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product 
access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage 
importation from other countries and bulk purchasing. The implementation of cost containment measures or other 
healthcare reforms may prevent us from being able to generate revenue, attain profitability, or commercialize 
veverimer and those for which we may receive regulatory approval in the future.

If we fail to obtain and sustain an adequate level of coverage and reimbursement for veverimer by third-

party payers, sales would be adversely affected.

While we expect patients who have metabolic acidosis and CKD to need chronic treatment, we anticipate that 

most patients will rely on coverage and reimbursement by a third-party payer, such as Medicare, Medicaid or a 
private health insurer, to pay for such treatment. There will be no commercially viable market for veverimer without 
coverage and reimbursement from third-party payers. Additionally, even if we obtain third-party payer coverage and 
reimbursement for veverimer, if the level of coverage and reimbursement is below our expectations, or if 
reimbursement requires stringent prior authorization or other forms of utilization management, our revenue and 
gross margins will be adversely affected.

Obtaining coverage and reimbursement for a product from a government or other third-party payer can be an 

expensive and time-consuming process that could require us to provide supporting scientific, clinical and cost 
effectiveness data for the use of our products to the payer. We cannot be certain if and when we will obtain 

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coverage to allow us to sell veverimer, if approved, into our target markets. Even if we do obtain coverage, third-
party payers, carefully review and increasingly question the coverage of, and challenge the prices charged for, 
drugs. Reimbursement rates from third-party payers vary depending on the payer, the insurance plan and other 
factors. A current trend in the United States health care industry is toward cost containment. Large public and 
private payers, managed care organizations, group purchasing organizations and similar organizations are exerting 
increasing influence on decisions regarding the use of, and reimbursement levels for, particular treatments. Such 
third-party payers, including Medicare, are questioning the coverage of, and challenging the prices charged for 
medical products and services, and many third-party payers limit coverage of, or reimbursement for, newly 
approved health care products.

In addition, there may be significant delays in obtaining such coverage and reimbursement for newly approved 

products, and coverage may be more limited than the purposes for which the product is approved by the FDA or 
comparable foreign regulatory authorities. Moreover, eligibility for coverage and reimbursement does not imply that 
a product will be paid for in all cases or at a rate that covers our costs, including research, development, intellectual 
property, manufacture, sale and distribution expenses.

Interim reimbursement levels for new products, if applicable, may also not be sufficient to cover our costs and 
may not be made permanent. Reimbursement rates may vary according to the use of the product and the clinical 
setting in which it is used, may be based on reimbursement levels already set for lower cost products and may be 
incorporated into existing payments for other services. Net prices for products may be reduced by mandatory 
discounts or rebates required by government healthcare programs or private payers, by any future laws limiting drug 
prices and by any future relaxation of laws that presently restrict imports of product from countries where they may 
be sold at lower prices than in the United States.

Coverage and reimbursement by a third-party payer may depend upon a number of factors, including the third-

party payer’s determination that use of a product is:

• a covered benefit under its health plan;

• safe, effective and medically necessary;

• appropriate for the specific patient;

• cost-effective; and

• neither experimental nor investigational.

We cannot be sure that coverage and reimbursement will be available for veverimer and, if coverage and 
reimbursement are available, what the level of reimbursement will be. Our inability to promptly obtain coverage and 
adequate reimbursement rates from both government-funded and private payers for any approved products that we 
develop could have a material adverse effect on our operating results, our ability to raise capital needed to 
commercialize products and our overall financial condition.

Reimbursement may impact the demand for, and the price of, veverimer, if approved. Assuming we obtain 
coverage for veverimer by a third-party payer, the resulting reimbursement payment rates may not be adequate or 
may require co-payments that patients find unacceptably high. Although we may be able to provide co-pay 
assistance to some patients with commercial healthcare insurance, some commercial health insurance plans limit 
how this assistance may count towards a patient's deductible and other cost-sharing requirements. Patients who 
are prescribed medications for the treatment of their conditions, and their prescribing physicians, generally rely on 
third-party payers to reimburse all or part of the costs associated with those medications. Patients are unlikely to 
use veverimer unless coverage is provided and reimbursement is adequate to cover all or a significant portion of the 
cost of veverimer. Therefore, coverage and adequate reimbursement is critical to new product acceptance. 
Coverage decisions may depend upon clinical and economic standards that disfavor new products when more 
established or lower cost therapeutic alternatives are already available or subsequently become available.

We expect to experience pricing pressures in connection with the sale of our product candidate due to the trend 

toward managed healthcare, the increasing influence of health maintenance organizations, and recent legislative 
proposals. The downward pressure on healthcare costs in general, particularly prescription medicines, medical 
devices and surgical procedures and other treatments, has become very intense. As a result, increasingly high 
barriers are being erected to the successful commercialization of new products. Further, the adoption and 

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implementation of any future governmental cost containment or other health reform initiative may result in additional 
downward pressure on the price that we may receive for veverimer, if approved.

These cost-control initiatives could decrease the price we might establish for veverimer, which could result in 
product revenue being lower than anticipated. The pricing, coverage and reimbursement of veverimer, if approved, 
must be adequate to support a commercial infrastructure. If the price for veverimer decreases or if governmental 
and other third-party payers do not provide adequate coverage and reimbursement levels, our revenue and 
prospects for profitability will suffer. Reimbursement systems in international markets vary significantly by country 
and by region, and reimbursement approvals must be obtained on a country-by-country basis.

Outside the United States, international operations are generally subject to extensive governmental price 
controls and market regulations, and we believe the increasing emphasis on cost-containment initiatives in Europe, 
Canada, China and other countries will put pressure on the pricing and usage of veverimer. In many countries, the 
prices of medical products are subject to varying price control mechanisms as part of national health systems. Other 
countries allow companies to fix their own prices for medicinal products but monitor and control company profits. 
Additional foreign price controls or other changes in pricing regulation could restrict the amount that we are able to 
charge for veverimer, if approved. Accordingly, in markets outside the United States, the reimbursement for 
veverimer compared with the United States and may be insufficient to generate commercially reasonable revenue 
and profits.

We are subject to U.S. and certain foreign export and import controls, sanctions, embargoes, anti-
corruption laws, and anti-money laundering laws and regulations. Compliance with these legal standards 
could impair our ability to compete in domestic and international markets. We can face criminal liability and 
other serious consequences for violations which can harm our business.

We are subject to export control and import laws and regulations, including the U.S. Export Administration 
Regulations, U.S. Customs regulations, various economic and trade sanctions regulations administered by the U.S. 
Treasury Department’s Office of Foreign Assets Controls, the U.S. Foreign Corrupt Practices Act of 1977, as 
amended, the United States domestic bribery statute contained in 18 U.S.C. § 201, the United States Travel Act, 
the USA PATRIOT Act, and other state and national anti-bribery and anti-money laundering laws in the countries in 
which we conduct activities. Anti-corruption laws are interpreted broadly and prohibit companies and their 
employees, agents, contractors, and other partners from authorizing, promising, offering, or providing, directly or 
indirectly, improper payments or anything else of value to recipients in the public or private sector. We may engage 
third parties for clinical trials outside of the United States, to sell veverimer abroad once we enter a 
commercialization phase, and/or to obtain necessary permits, licenses, patent registrations, and other regulatory 
approvals. We have direct or indirect interactions with officials and employees of government agencies or 
government-affiliated hospitals, universities, and other organizations. We can be held liable for the corrupt or other 
illegal activities of our employees, agents, contractors, and other partners, even if we do not explicitly authorize or 
have actual knowledge of such activities. Any violations of the laws and regulations described above may result in 
substantial civil and criminal fines and penalties, imprisonment, the loss of export or import privileges, debarment, 
tax reassessments, breach of contract and fraud litigation, reputational harm, and other consequences.

Risks Related to Intellectual Property

We may become subject to claims alleging infringement of third parties’ patents or proprietary rights 
and/or claims seeking to invalidate our patents, which would be costly, time consuming and, if successfully 
asserted against us, delay or prevent the development and commercialization of veverimer.

Our success depends in part on our ability to develop, manufacture, market and sell veverimer, if approved, and 

use our proprietary technologies without alleged or actual infringement, misappropriation or other violation of the 
patents and other intellectual property rights of third parties. There have been many lawsuits and other proceedings 
asserting patents and other intellectual property rights in the pharmaceutical and biotechnology industries. We 
cannot assure you that veverimer will not infringe existing or future third-party patents. Because patent applications 
can take many years to issue and may be confidential for 18 months or more after filing, there may be applications 
now pending of which we are unaware and which may later result in issued patents that we may infringe by 
commercializing veverimer. There may also be issued patents or pending patent applications that we are aware of, 
but that we think are irrelevant to veverimer, which may ultimately be found to be infringed by the manufacture, sale, 
or use of veverimer. Moreover, we may face claims from non-practicing entities that have no relevant product 
revenue and against whom our own patent portfolio may thus have no deterrent effect. In addition, veverimer has a 
complex structure that makes it difficult to conduct a thorough search and review of all potentially relevant third-

73

party patents. We may be unaware of one or more issued patents that would be infringed by the manufacture, sale 
or use of veverimer.

We may be subject to third-party claims in the future against us or our collaborators that would cause us to incur 

substantial expenses and, if successful against us, could cause us to pay substantial damages, including treble 
damages and attorney’s fees if we are found to be willfully infringing a third-party’s patents. Furthermore, because 
of the potential for significant damage awards, which are not necessarily predictable, it is not unusual to find even 
arguably unmeritorious claims resulting in large settlements. We may be required to indemnify future collaborators 
against such claims. If a patent infringement suit were brought against us or our collaborators, we or they could be 
forced to stop or delay research, development, manufacturing or sales of the product or product candidate that is 
the subject of the suit. As a result of patent infringement claims, or in order to avoid potential claims, we or our 
collaborators may choose to seek, or be required to seek, a license from the third party and would most likely be 
required to pay license fees or royalties or both. These licenses may not be available on acceptable terms, or at all. 
Even if we or our collaborators were able to obtain a license, the rights may be nonexclusive, which would give our 
competitors access to the same intellectual property. Ultimately, we could be prevented from commercializing a 
product, or forced to redesign it, or to cease some aspect of our business operations if, as a result of actual or 
threatened patent infringement claims, we or our collaborators are unable to enter into licenses on acceptable 
terms. Even if we are successful in defending against such claims, such litigation can be expensive and time 
consuming to litigate and would divert management’s attention from our core business. Moreover, some claimants 
may have substantially greater resources than we do and may be able to sustain the costs of complex intellectual 
property litigation to a greater degree and for longer periods of time than we could. Any of these events could harm 
our business significantly.

In addition to infringement claims against us, if third parties prepare and file patent applications in the United 
States that also claim technology similar or identical to ours, we may have to participate in interference or derivation 
proceedings in the U.S. Patent and Trademark Office, or the USPTO, to determine which party is entitled to a 
patent on the disputed invention. Recently, due to changes in U.S. law referred to as patent reform, new procedures 
including inter partes review and post-grant review have been implemented. This reform adds uncertainty to the 
possibility of challenge to our patents in the future. We may also become involved in similar opposition proceedings 
in the European Patent Office or similar offices in other jurisdictions regarding our intellectual property rights with 
respect to veverimer and our technology. Since patent applications are confidential for a period of time after filing, 
we cannot be certain that we were the first to file any patent application related to our product candidate.

We may become involved in lawsuits to protect or enforce our patents or other intellectual property, 

which could be expensive, time consuming and unsuccessful.

Competitors may infringe, misappropriate or otherwise violate our patents, trademarks, copyrights or other 
intellectual property, or those of our licensors. To counter infringement, misappropriation, unauthorized use or other 
violations, we may be required to file legal claims, which can be expensive and time consuming and divert the time 
and attention of our management and scientific personnel. In some cases, it may be difficult or impossible to detect 
third-party infringement or misappropriation of our intellectual property rights, even in relation to issued patent 
claims, and proving any such infringement may be even more difficult.

We may not be able to prevent, alone or with our licensees or any future licensors, infringement, 

misappropriation or other violations of our intellectual property rights, particularly in countries where the laws may 
not protect those rights as fully as in the United States. Any claims we assert against perceived infringers could 
provoke these parties to assert counterclaims against us alleging that we infringe their patents. In addition, in a 
patent infringement proceeding, there is a risk that a court will decide that a patent of ours is invalid or 
unenforceable, in whole or in part, and that we do not have the right to stop the other party from exploiting the 
claimed subject matter at issue. There is also a risk that, even if the validity of such patents is upheld, the court will 
construe the patent’s claims narrowly or decide that we do not have the right to stop the other party from exploiting 
its technology on the grounds that our patents do not cover such technology. An adverse outcome in a litigation or 
proceeding involving our patents could limit our ability to assert our patents against those parties or other 
competitors and may curtail or preclude our ability to exclude third parties from making, using, importing and selling 
similar or competitive products. Any of these occurrences could adversely affect our competitive business position, 
business prospects and financial condition. Similarly, if we assert trademark infringement claims, a court may 
determine that the marks we have asserted are invalid or unenforceable, or that the party against whom we have 
asserted trademark infringement has superior rights to the marks in question. In this case, we could ultimately be 
forced to cease use of such trademarks.

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In any infringement, misappropriation or other intellectual property litigation, any award of monetary damages 

we receive may not be commercially valuable. Furthermore, because of the substantial amount of discovery 
required in connection with intellectual property litigation, there is a risk that some of our confidential information 
could be compromised by disclosure during litigation. Moreover, there can be no assurance that we will have 
sufficient financial or other resources to file and pursue such infringement claims, which typically last for years 
before they are concluded. Even if we ultimately prevail in such claims, the monetary cost of such litigation and the 
diversion of the attention of our management and scientific personnel could outweigh any benefit we receive as a 
result of the proceedings.

If our intellectual property related to veverimer is not adequate, we may not be able to compete 

effectively in our market.

We rely upon a combination of patents, trade secret protection, employment and confidentiality agreements to 

protect the intellectual property related to veverimer. Any disclosure to or misappropriation by third parties of our 
confidential or proprietary information could enable competitors to quickly duplicate or surpass our technological 
achievements, thus eroding our competitive position in our market.

The strength of patents in the biotechnology and pharmaceutical field involves complex legal and scientific 
questions and can be uncertain. The patent applications that we own or license may fail to result in issued patents 
in the United States or in foreign countries, and even if issued, the patents may not meaningfully protect veverimer, 
effectively prevent competitors and third parties from commercializing competitive products or otherwise provide us 
with any competitive advantage. Our pending patent applications cannot be enforced against third parties practicing 
the technology claimed in such applications unless and until a patent issues from such applications. Further, the 
examination process may require us to narrow the claims for our pending patent applications, which may limit the 
scope of patent protection that may be obtained if these applications issue. Even if patents do successfully issue, 
third parties may challenge the validity, enforceability or scope thereof, which may result in such patents being 
narrowed, invalidated or held unenforceable. For example, patents granted by the European Patent Office may be 
opposed by any person within nine months from the publication of the grant. Similar proceedings are available in 
other jurisdictions, and in some jurisdictions third parties can raise questions of validity with a patent office even 
before a patent has granted. Furthermore, even if they are unchallenged, our patents and patent applications may 
not adequately protect our intellectual property or prevent others from designing around our claims. For example, a 
third party may develop a competitive product that provides therapeutic benefits similar to veverimer but has a 
sufficiently different composition to fall outside the scope of our patent protection. If the breadth or strength of 
protection provided by the patents and patent applications we hold or pursue with respect to veverimer is 
successfully challenged, then our ability to commercialize veverimer could be negatively affected, and we may face 
unexpected competition that could have a material adverse impact on our business. Further, if we encounter delays 
in our clinical trials, the period of time during which we could market veverimer under patent protection would be 
reduced.

Even where laws provide protection, costly and time-consuming litigation could be necessary to enforce and 
determine the scope of our proprietary rights, and the outcome of such litigation would be uncertain. If we or one of 
our future collaborators were to initiate legal proceedings against a third party to enforce a patent covering 
veverimer, the defendant could counterclaim that our patent is invalid and/or unenforceable. In patent litigation in 
the United States, defendant counterclaims alleging invalidity and/or unenforceability are commonplace. Grounds 
for a validity challenge could be an alleged failure to meet any of several statutory requirements, including lack of 
novelty, obviousness or non-enablement. Grounds for an unenforceability assertion could be an allegation that 
someone connected with prosecution of the patent withheld relevant information from the USPTO, or made a 
misleading statement, during prosecution. The outcome following legal assertions of invalidity and unenforceability 
is unpredictable. With respect to validity, for example, we cannot be certain that there is no invalidating prior art, of 
which we and the patent examiner were unaware during prosecution. If a defendant were to prevail on a legal 
assertion of invalidity and/or unenforceability against our intellectual property related to veverimer, we would lose at 
least part, and perhaps all, of the patent protection on veverimer. Such a loss of patent protection would have a 
material adverse impact on our business. There is also a risk that, even if the validity of such patents is upheld, the 
court will construe the patent’s claims narrowly or decide that we do not have the right to stop the other party from 
exploiting its technology on the grounds that our patents do not cover that technology. Moreover, our competitors 
could counterclaim that we infringe their intellectual property, and some of our competitors have substantially 
greater intellectual property portfolios than we do.

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We also rely on trade secret protection, employment and confidentiality agreements to protect proprietary know-
how that may not be patentable, processes for which patents may be difficult to obtain and/or enforce and any other 
elements of our product development processes that involve proprietary know-how, information or technology that is 
not covered by patents. Although we require all of our employees to assign their inventions to us, and endeavor to 
execute confidentiality agreements with all of our employees, consultants, advisors and any third parties who have 
access to our proprietary know-how, information or technology, we cannot be certain that we have executed such 
agreements with all parties who may have helped to develop our intellectual property or who had access to our 
proprietary information, nor can we be certain that our agreements will not be breached. Any party with whom we 
have executed such an agreement may breach that agreement and disclose our proprietary information, including 
our trade secrets, and we may not be able to obtain adequate remedies for such breaches. Enforcing a claim that a 
party illegally disclosed or misappropriated a trade secret is difficult, expensive and time-consuming, and the 
outcome is unpredictable. Further, if any of our trade secrets were to be lawfully obtained or independently 
developed by a competitor, we would have no right to prevent such third party, or those to whom they communicate 
such technology or information, from using that technology or information to compete with us. We cannot guarantee 
that our trade secrets and other confidential proprietary information will not be disclosed or that competitors or third 
parties such as contract manufacturers will not otherwise gain access to our trade secrets or independently develop 
substantially equivalent information and techniques. For example, we and our third-party suppliers continue to refine 
and improve the manufacturing process, certain aspects of which are complex and unique, and we may encounter 
difficulties with new or existing processes, particularly as we seek to significantly increase our capacity to 
commercialize veverimer. Our reliance on contract manufacturers exposes us to the possibility that they, or third 
parties with access to their facilities, will have access to and may appropriate our trade secrets or other proprietary 
information.

Further, the laws of some foreign countries do not protect proprietary rights to the same extent or in the same 

manner as the laws of the United States. As a result, we may encounter significant problems in protecting and 
defending our intellectual property both in the United States and abroad. If we are unable to prevent material 
disclosure of the intellectual property related to our technologies to third parties, we will not be able to establish or 
maintain a competitive advantage in our market, which could materially adversely affect our business, results of 
operations and financial condition.

Changes in U.S. patent law could diminish the value of patents in general, thereby impairing our ability 

to protect our product candidate, veverimer.

Changes in either the patent laws or interpretation of the patent laws in the United States could increase the 

uncertainties and costs surrounding the prosecution of patent applications and the enforcement or defense of 
issued patents. Assuming that other requirements for patentability are met, prior to March 2013, in the United 
States, the first to invent the claimed invention was entitled to the patent, while outside the United States, the first to 
file a patent application was entitled to the patent. After March 2013, under the Leahy-Smith America Invents Act, or 
the America Invents Act, enacted in September 2011, the United States transitioned to a first inventor to file system 
in which, assuming that other requirements for patentability are met, the first inventor to file a patent application will 
be entitled to the patent on an invention regardless of whether a third party was the first to invent the claimed 
invention. A third party that files a patent application in the USPTO after March 2013, but before us could therefore 
be awarded a patent covering an invention of ours even if we had made the invention before it was made by such 
third party. This will require us to be cognizant going forward of the time from invention to filing of a patent 
application. Since patent applications in the United States and most other countries are confidential for a period of 
time after filing or until issuance, we cannot be certain that we or our licensors were the first to either (i) file any 
patent application related to veverimer or (ii) invent any of the subject matter claimed in our or our licensor’s patents 
or patent applications.

The America Invents Act also includes a number of significant changes that affect the way patent applications 
will be prosecuted and also may affect patent litigation. These include allowing third party submission of prior art to 
the USPTO during patent prosecution and additional procedures to attack the validity of a patent by USPTO 
administered post-grant proceedings, including post-grant review, inter partes review, and derivation proceedings. 
Because of a lower evidentiary standard in USPTO proceedings compared to the evidentiary standard in U.S. 
federal courts necessary to invalidate a patent claim, a third party could potentially provide evidence in a USPTO 
proceeding sufficient for the USPTO to hold a claim invalid even though the same evidence would be insufficient to 
invalidate the claim if first presented in a district court action. Accordingly, a third party may attempt to use the 
USPTO procedures to invalidate our patent claims that would not have been invalidated if first challenged by the 
third party as a defendant in a district court action. Therefore, the America Invents Act and its implementation could 

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increase the uncertainties and costs surrounding the prosecution of our owned or in-licensed patent applications 
and the enforcement or defense of our owned or in-licensed issued patents, all of which could have a material 
adverse effect on our business, financial condition, results of operations, and prospects.

In addition, the patent positions of companies in the development and commercialization of biologics and 
pharmaceuticals are particularly uncertain. Recent U.S. Supreme Court rulings have narrowed the scope of patent 
protection available in certain circumstances and weakened the rights of patent owners in certain situations. This 
combination of events has created uncertainty with respect to the validity and enforceability of patents, once 
obtained. Depending on future actions by the U.S. Congress, the federal courts, and the USPTO, the laws and 
regulations governing patents could change in unpredictable ways that could have a material adverse effect on our 
existing patent portfolio and our ability to protect and enforce our intellectual property in the future.

Obtaining and maintaining our patent protection depends on compliance with various procedural, 
document submission, fee payment and other requirements imposed by governmental patent agencies, and 
our patent protection could be reduced or eliminated for non-compliance with these requirements.

The USPTO and various foreign patent agencies require compliance with a number of procedural, 

documentary, fee payment and other provisions to maintain patent applications and issued patents. Noncompliance 
with these requirements can result in abandonment or lapse of a patent or patent application, resulting in partial or 
complete loss of patent rights in the relevant jurisdiction. In such an event, competitors might be able to enter the 
market earlier than would otherwise have been the case.

We are in the process of pursuing registered trademarks for a commercial trade name for veverimer in 
the United States and elsewhere and failure to secure such registrations could adversely affect our business.

We are in the process of pursuing registered trademarks for a commercial trade name for veverimer in the 

United States and elsewhere. During trademark registration proceedings, our trademark application may be 
rejected. Although we are given an opportunity to respond to those rejections, we may be unable to overcome such 
rejections. In addition, in the USPTO and in comparable agencies in many foreign jurisdictions, third parties can 
oppose pending trademark applications and seek to cancel registered trademarks. Opposition or cancellation 
proceedings may be filed against our trademarks, and our trademarks may not survive such proceedings. Moreover, 
any name we propose to use with our product candidate in the United States must be approved by the FDA, 
regardless of whether we have registered it, or applied to register it, as a trademark. The FDA typically conducts a 
review of proposed product names, including an evaluation of potential for confusion with other product names. If 
the FDA objects to any of our proposed proprietary product names, approval may be delayed or we may be 
required to expend significant additional resources in an effort to identify a suitable substitute name that would 
qualify under applicable trademark laws, not infringe the existing rights of third parties and be acceptable to the 
FDA.

We may not be able to enforce our intellectual property rights throughout the world.

The laws of some foreign countries do not protect intellectual property rights to the same extent as the laws of 

the United States. For example, the requirements for patentability may differ in certain countries, particularly 
developing countries, and we may be unable to obtain issued patents that contain claims that adequately cover or 
protect veverimer or any future product candidates. Many companies have encountered significant problems in 
protecting and defending intellectual property rights in certain foreign jurisdictions. The legal systems of some 
countries, particularly developing countries, do not favor the enforcement of patents and other intellectual property 
protection, especially those relating to life sciences. This could make it difficult for us to stop the infringement of our 
patents or the misappropriation of our other intellectual property rights. For example, many foreign countries have 
compulsory licensing laws under which a patent owner must grant licenses to third parties. In addition, many 
countries limit the enforceability of patents against third parties, including government agencies or government 
contractors. In these countries, patents may provide limited or no benefit.

Proceedings to enforce our patent rights in foreign jurisdictions, whether or not successful, could result in 
substantial costs and divert our efforts and attention from other aspects of our business. Furthermore, while we 
intend to protect our intellectual property rights in our expected significant markets, we cannot ensure that we will be 
able to initiate or maintain similar efforts in all jurisdictions in which we may wish to market veverimer. 
Consequently, we may not be able to prevent third parties from practicing our technology in all countries outside the 
United States, or from selling or importing products made using our technology in and into those other jurisdictions 
where we do not have intellectual property rights. Competitors may use our technologies in jurisdictions where we 

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have not obtained patent protection to develop their own products and may also export infringing products to 
territories where we have patent protection, but enforcement is not as strong as that in the United States. These 
products may compete with our product candidates, and our patents or other intellectual property rights may not be 
effective or sufficient to prevent them from competing. Accordingly, our efforts to protect our intellectual property 
rights in such countries may be inadequate. In addition, changes in the law and legal decisions by courts in the 
United States and foreign countries may affect our ability to obtain and enforce adequate intellectual property 
protection for our technology.

We may be subject to claims that we or our employees, consultants, contractors or advisors have 
infringed, misappropriated or otherwise violated the intellectual property of a third party, or claiming 
ownership of what we regard as our own intellectual property.

Many of our employees were previously employed at universities or other biotechnology or pharmaceutical 
companies, including our competitors or potential competitors. Although we try to ensure that our employees do not 
use the intellectual property and other proprietary information, know-how or trade secrets of others in their work for 
us, we may be subject to claims that we or these employees have used or disclosed such intellectual property or 
other proprietary information. Litigation may be necessary to defend against these claims.

In addition, while we typically require our employees, consultants and contractors who may be involved in the 
development of intellectual property to execute agreements assigning such intellectual property to us, we may be 
unsuccessful in executing such an agreement with each party who in fact develops intellectual property that we 
regard as our own. To the extent that we fail to obtain such assignments, such assignments do not contain a self-
executing assignment of intellectual property rights or such assignments are breached, we may be forced to bring 
claims against third parties, or defend claims they may bring against us, to determine the ownership of what we 
regard as our intellectual property. If we fail in prosecuting or defending any such claims, in addition to paying 
monetary damages, we may lose valuable intellectual property rights or personnel. Such intellectual property rights 
could be awarded to a third party, and we could be required to obtain a license from such third party to 
commercialize our technology or products. Such a license may not be available on commercially reasonable terms 
or at all. Even if we are successful in prosecuting or defending against such claims, litigation could result in 
substantial costs and be a distraction to our management and scientific personnel.

Patent terms may be inadequate to protect our competitive position on our product candidate, 

veverimer, for an adequate amount of time.

Patents have a limited lifespan. In the United States, if all maintenance fees are timely paid, the natural 

expiration of a patent is generally 20 years from its earliest U.S. non-provisional filing date. Various extensions may 
be available, but the life of a patent, and the protection it affords, is limited. Even if patents covering veverimer are 
obtained, once the patent life has expired, we may be open to competition from competitive products, including 
generics or biosimilars. Given the amount of time required for the development, testing and regulatory review of our 
product candidate, veverimer, patents protecting veverimer might expire before or shortly after veverimer is 
commercialized. As a result, our owned and licensed patent portfolio may not provide us with sufficient rights to 
exclude others from commercializing products similar or identical to ours.

Intellectual property rights do not necessarily address all potential threats to our business.

Once granted, patents may remain open to opposition, interference, re-examination, post-grant review, inter 
partes review, nullification or derivation action in court or before patent offices or similar proceedings for a given 
period after allowance or grant, during which time third parties can raise objections against such grant. In the course 
of such proceedings, which may continue for a protracted period of time, the patent owner may be compelled to limit 
the scope of the allowed or granted claims thus attacked, or may lose the allowed or granted claims altogether. In 
addition, the degree of future protection afforded by our intellectual property rights is uncertain because even 
granted intellectual property rights have limitations and may not adequately protect our business. The following 
examples are illustrative:

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others may be able to make products that are similar to veverimer but that are not covered by the claims of 
our patent rights;

the patents of third parties may have an adverse effect on our business;

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we or our licensors or any future strategic partners might not have been the first to conceive or reduce to 
practice the inventions covered by the issued patent or pending patent application that we own or have 
exclusively licensed;

we or our licensors or any future strategic partners might not have been the first to file patent applications 
covering certain of our inventions;

others may independently develop similar or alternative technologies or duplicate any of our technologies 
without infringing our intellectual property rights;

it is possible that our pending patent applications will not lead to issued patents;

issued patents that we may own or that we exclusively license in the future may not provide us with any 
competitive advantage, or may be held invalid or unenforceable, as a result of legal challenges by third 
parties, including our competitors, public interest groups, or investment firms that engage in short selling 
activities;

our competitors might conduct research and development activities in the United States and other countries 
that provide a safe harbor from patent infringement claims for certain research and development activities, 
as well as in countries where we do not have patent rights and then use the information learned from such 
activities to develop competitive products for sale in our major commercial markets;

third parties performing manufacturing or testing for us using our product candidates or technologies could 
use the intellectual property of others without obtaining a proper license;

we may not develop additional proprietary technologies that are patentable; and

the patents of others may have an adverse effect on our business.

Should any of these events occur, they could have a material adverse effect on our business, financial 

condition, results of operations and prospects.

Risks Related to Our Common Stock

Our stock price may be volatile and fluctuate substantially and you may not be able to resell shares of 

our common stock at or above the price you paid.

The trading price of our common stock has been and is likely to continue to be highly volatile and is subject to 

wide fluctuations in response to various factors, some of which are beyond our control. These factors include: 

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announcements of regulatory approval or a complete response letter to veverimer, or specific label 
indications or patient populations for its use, or changes or delays in the regulatory review process;

announcements of therapeutic innovations or new products by us or our competitors;

adverse actions taken by regulatory agencies with respect to our clinical trials, manufacturing supply chain 
or sales and marketing activities;

adverse events experienced by the patient population taking veverimer, whether or not related to our 
product candidate;

changes or developments in laws or regulations applicable to veverimer;

changes in existing tax laws, treaties or regulations or the interpretations or enforcement thereof, or the 
enactment or adoption of new tax laws, regulations or policies;

any adverse changes to our relationship with any manufacturers or suppliers;

the success of our testing and clinical trials;

the success of our efforts to scale-up and optimize our manufacturing process; 

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the success of our efforts to acquire or license or discover additional product candidates, if any;

any intellectual property infringement actions in which we may become involved;

announcements concerning our competitors or the pharmaceutical industry in general;

achievement of expected product sales and profitability;

• manufacture, supply or distribution shortages;

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actual or anticipated fluctuations in our operating results;

changes in financial estimates or recommendations by securities analysts;

trading volume of our common stock;

sales of our common stock by us, our executive officers and directors or our stockholders in the future;

general economic and market conditions and overall fluctuations in the United States equity markets; and

the loss of any of our key scientific or management personnel.

In addition, the stock markets in general, and the markets for pharmaceutical and biotechnology stocks in 
particular, have experienced extreme volatility that may have been unrelated to the operating performance of the 
issuer. These broad market fluctuations may adversely affect the trading price or liquidity of our common stock. In 
the past, when the market price of a stock has been volatile, holders of that stock have sometimes instituted 
securities class action litigation against the issuer. If any of our stockholders were to bring such a lawsuit against us, 
we could incur substantial costs defending the lawsuit and the attention of our management would be diverted from 
the operation of our business, which could seriously harm our financial position. Any adverse determination in 
litigation could also subject us to significant liabilities.

If securities or industry analysts do not, or do not continue to, publish research or reports about our 
business, or if they issue an adverse or misleading opinion regarding our business, our stock price and 
trading volume could decline.

The trading market for our common stock is and will be influenced by the research and reports that industry or 

securities analysts publish about us or our business. If any of the analysts who currently cover us issue, or in the 
event we obtain additional coverage and any new analyst issues, an adverse or misleading opinion regarding us, 
our business model, our intellectual property or our stock performance, or if our clinical trials and operating results 
fail to meet the expectations of analysts, our stock price would likely decline. If one or more of these analysts cease 
coverage of us or fail to publish reports on us regularly, we could lose visibility in the financial markets, which in turn 
could cause our stock price or trading volume to decline.

If we sell shares of our common stock in future financings, stockholders may experience immediate 

dilution and, as a result, our stock price may decline.

We may from time to time issue additional shares of common stock at a discount from the current trading price 
of our common stock. As a result, our stockholders would experience immediate dilution upon the purchase of any 
shares of our common stock sold at such discount. In addition, as opportunities present themselves, we may enter 
into financing or similar arrangements in the future, including the issuance of debt securities, preferred stock or 
common stock. If we issue common stock or securities convertible into common stock, our common stockholders 
would experience additional dilution and, as a result, our stock price may decline.

Sales of a substantial number of shares of our common stock in the public market could cause our stock 

price to fall.

Sales of a substantial number of shares of our common stock in the public market could occur at any time, 
subject to certain restrictions described below. These sales, or the perception in the market that holders of a large 
number of shares intend to sell shares, could reduce the market price of our common stock. If stockholders who 
held shares of our common stock prior to our IPO sell, or indicate an intention to sell, substantial amounts of our 
common stock in the public market, the trading price of our common stock could decline.

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As of December 31, 2019, we had outstanding a total of 49,763,176 shares. All of our outstanding shares of 

common stock are currently freely tradable in the public market. 

In addition, shares of common stock that are either subject to outstanding options or reserved for future 

issuance under our 2018 Equity Incentive Plan, or 2018 Plan, or our Employee Stock Purchase Plan, or ESPP, will 
become eligible for sale in the public market to the extent permitted by the provisions of various vesting schedules, 
the lock-up agreements and Rule 144 and Rule 701 under the Securities Act. The number of shares of our common 
stock reserved for issuance under the 2018 Plan will automatically increase on the first day of each fiscal year by 
the lesser of 4.0% of the number of shares of common stock outstanding on the first day of such fiscal year, 
3,200,000 shares of our common stock or such lesser amount as is determined by our board of directors.

The number of shares of our common stock reserved for issuance under the ESPP will automatically increase 
on the first day of each fiscal year by the lesser of 1.0% of the number of shares of common stock outstanding on 
the first day of such fiscal year, 800,000 shares of our common stock or such lesser amount as is determined by our 
board of directors. Unless our board of directors elects not to increase the number of shares available for future 
grant each year, our stockholders may experience additional dilution. If these additional shares of common stock 
are sold, or if it is perceived that they will be sold, in the public market, the trading price of our common stock could 
decline.

As of December 31, 2019, holders of an aggregate of approximately 18.7 million shares of our common stock 

are entitled, subject to some conditions, to require us to file registration statements covering their shares or to 
include their shares in registration statements that we may file for ourselves or other stockholders. Registration of 
these shares under the Securities Act would result in the shares becoming freely tradable without restriction under 
the Securities Act, except for shares held by affiliates, as defined in Rule 144 under the Securities Act. Any sales of 
securities by these stockholders could have a material adverse effect on the trading price of our common stock.

Our principal stockholders and management own a significant percentage of our stock and will be able 

to exert significant control over matters subject to stockholder approval.

As of December 31, 2019, our executive officers, directors, holders of 5.0% or more of our capital stock and 

their respective affiliates beneficially owned approximately 55.7% of our outstanding voting stock.

Therefore, these stockholders have the ability to influence us through this ownership position. These 

stockholders may be able to determine all matters requiring stockholder approval. For example, these stockholders 
may be able to control elections of directors, amendments of our organizational documents, or approval of any 
merger, sale of assets, or other major corporate transaction. This may prevent or discourage unsolicited acquisition 
proposals or offers for our common stock that you may feel are in your best interest as one of our stockholders.

Provisions in our charter documents and under Delaware law could discourage a takeover that 

stockholders may consider favorable and may lead to entrenchment of management.

Our amended and restated certificate of incorporation and amended and restated bylaws contain provisions that 

could significantly reduce the value of our shares to a potential acquiror or delay or prevent changes in control or 
changes in our management without the consent of our board of directors. The provisions in our charter documents 
include the following:

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a classified board of directors with 3-year staggered terms, which may delay the ability of stockholders to 
change the membership of a majority of our board of directors;

no cumulative voting in the election of directors, which limits the ability of minority stockholders to elect 
director candidates;

the exclusive right of our board of directors to elect a director to fill a vacancy created by the expansion of 
the board of directors or the resignation, death or removal of a director, which prevents stockholders from 
being able to fill vacancies on our board of directors, unless the board of directors determines by resolution 
that any such vacancy shall be filled by the affirmative vote of the stockholders;

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the prohibition on removal of directors without cause;

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the ability of our board of directors to authorize the issuance of shares of preferred stock and to determine 
the price and other terms of those shares, including preferences and voting rights, without stockholder 
approval, which could be used to significantly dilute the ownership of a hostile acquiror;

the ability of our board of directors to alter our bylaws without obtaining stockholder approval;

the required approval of at least 66 2⁄3% of the shares entitled to vote at an election of directors to adopt, 
amend or repeal certain provisions of our bylaws or repeal the provisions of our amended and restated 
certificate of incorporation regarding the election and removal of directors;

a prohibition on stockholder action by written consent, which forces stockholder action to be taken at an 
annual or special meeting of our stockholders;

the requirement that a special meeting of stockholders may be called only by the chairman of the board of 
directors, the chief executive officer, the president or the board of directors, which may delay the ability of 
our stockholders to force consideration of a proposal or to take action, including the removal of directors; 
and

advance notice procedures that stockholders must comply with in order to nominate candidates to our 
board of directors or to propose matters to be acted upon at a stockholders’ meeting, which may discourage 
or deter a potential acquiror from conducting a solicitation of proxies to elect the acquiror’s own slate of 
directors or otherwise attempting to obtain control of us.

In addition, these provisions would apply even if we were to receive an offer that some stockholders may 

consider beneficial.

We are also subject to the anti-takeover provisions contained in Section 203 of the General Corporation Law of 
the State of Delaware, or the DGCL. Under Section 203 of the DGCL, a corporation may not, in general, engage in 
a business combination with any holder of 15.0% or more of its capital stock unless the holder has held the stock for 
three years or, among other exceptions, the board of directors has approved the transaction.

Claims for indemnification by our directors and officers may reduce our available funds to satisfy 

successful third-party claims against us and may reduce the amount of money available to us.

Our amended and restated certificate of incorporation provides that we will indemnify our directors and officers 

to the fullest extent permitted by Delaware law.

In addition, as permitted by Section 145 of the DGCL, our amended and restated certificate of incorporation, 
which became effective immediately prior to the completion of our IPO and our indemnification agreements that we 
have entered into with our directors and officers provide that:

• We will indemnify our directors and officers for serving us in those capacities or for serving other business 
enterprises at our request, to the fullest extent permitted by Delaware law. Delaware law provides that a 
corporation may indemnify such person if such person acted in good faith and in a manner such person 
reasonably believed to be in or not opposed to the best interests of the registrant and, with respect to any 
criminal proceeding, had no reasonable cause to believe such person’s conduct was unlawful.

• We may, in our discretion, indemnify employees and agents in those circumstances where indemnification 

is permitted by applicable law.

• We are required to advance expenses, as incurred, to our directors and officers in connection with 

defending a proceeding, except that such directors or officers shall undertake to repay such advances if it is 
ultimately determined that such person is not entitled to indemnification.

• We will not be obligated pursuant to our amended and restated bylaws to indemnify a person with respect 

to proceedings initiated by that person against us or our other indemnitees, except with respect to 
proceedings authorized by our board of directors or brought to enforce a right to indemnification.

• The rights conferred in our amended and restated bylaws are not exclusive, and we are authorized to enter 
into indemnification agreements with our directors, officers, employees and agents and to obtain insurance 
to indemnify such persons.

82

• We may not retroactively amend our amended and restated certificate of incorporation provisions to reduce 

our indemnification obligations to directors and officers.

Our amended and restated certificate of incorporation and our amended and restated bylaws designate 

the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions 
and proceedings that may be initiated by our stockholders, which could limit our stockholders’ ability to 
obtain a favorable judicial forum for disputes with us or our current or former directors, officers or 
employees.

Our amended and restated certificate of incorporation provides that, subject to limited exceptions, the Court of 
Chancery of the State of Delaware is the sole and exclusive forum for any derivative action or proceeding brought 
on our behalf, any action asserting a breach of fiduciary duty owed by any of our current or former directors, officers 
or other employees to us or our stockholders, any action asserting a claim against us or any of our directors, officers 
or other employees arising pursuant to the DGCL, our amended and restated certificate of incorporation or our 
amended and restated bylaws, any action asserting a claim against us or any of our directors, officers or other 
employees that is governed by the internal affairs doctrine, or any other action asserting an “internal corporate 
claim,” as defined in Section 115 of the DGCL. Any person or entity purchasing or otherwise acquiring any interest 
in shares of our capital stock shall be deemed to have notice of and to have consented to the provisions of our 
amended and restated certificate of incorporation and amended and restated bylaws described above. This choice 
of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for 
disputes with us or our current or former directors, officers or other employees, which may discourage such lawsuits 
against us and our current or former directors, officers and employees. Alternatively, if a court were to find these 
provisions of our amended and restated certificate and our amended and restated bylaws inapplicable to, or 
unenforceable in respect of, one or more of the specified types of actions or proceedings, we may incur additional 
costs associated with resolving such matters in other jurisdictions, which could have a material adverse effect on 
our business, financial condition, results of operations and prospects.

We may be required to pay severance benefits to our executive officers who are terminated in 

connection with a change in control, which could harm our financial condition or results.

Certain of our executive officers are parties to severance arrangements that contain change in control and 
severance provisions providing for cash payments for severance and other benefits and acceleration of vesting of 
stock options in the event of a termination of employment in connection with a change in control of our company. 
The accelerated vesting of options could result in dilution to our existing stockholders and harm the market price of 
our common stock. The payment of these severance benefits could harm our financial condition and results. In 
addition, these potential severance payments may discourage or prevent third parties from seeking a business 
combination with us.

We do not currently intend to pay dividends on our common stock, and, consequently, your ability to 

achieve a return on your investment will depend on appreciation in the price of our common stock.

We do not currently intend to pay any cash dividends on our common stock for the foreseeable future. We 
currently intend to invest our future earnings, if any, to fund our growth. Additionally, the terms of our Term Loan 
restrict our ability to pay dividends. Therefore, you are not likely to receive any dividends on your common stock for 
the foreseeable future. Since we do not intend to pay dividends, your ability to receive a return on your investment 
will depend on any future appreciation in the market value of our common stock. There is no guarantee that our 
common stock will appreciate or even maintain the price at which our holders have purchased it.

Our ability to use our net operating losses to reduce our tax liability may be limited.

We have incurred substantial losses during our history. Our ability to utilize net operating loss carryforwards is 

subject to the rules of Section 382 of the Internal Revenue Code of 1986, as amended, or the Code. Section 382 
generally restricts the use of net operating loss carryforwards after an “ownership change.” If we have experienced 
or experience in the future an “ownership change” for purposes Section 382, we may be subject to annual limits on 
our ability to utilize net operating loss carryforwards. An ownership change is, as a general matter, triggered by 
sales or acquisitions of our stock in excess of 50.0% on a cumulative basis during a three-year period by persons or 
groups of persons owning 5.0% or more of our total equity value. We have not performed any analysis under 
Section 382 of the Code. As a result, uncertainty exists as to whether we may have undergone an ownership 
change in the past, whether as a result of our IPO or otherwise. We cannot provide any assurance that our net 

83

operating losses will be available. Accordingly, we could pay taxes earlier and/or in larger amounts than would be 
the case if the net operating losses were available to reduce federal income taxes without restriction.

As noted above under “Risks Related to Our Limited Operating History, Financial Condition and Capital 

Requirements,” we anticipate that we will continue to incur losses for the foreseeable future. Our ability to utilize any 
future net operating losses may also be limited by the recently enacted Tax Cut and Jobs Act, or Tax Act. Under the 
Tax Act, the amount of post-2017 net operating losses that we are permitted to deduct in any taxable year is limited 
to 80.0% of our taxable income in such year, where taxable income is determined without regard to the net 
operating loss deduction itself. In addition, the Tax Act generally eliminates the ability to carry back any net 
operating loss to prior taxable years, while allowing post-2017 unused net operating losses to be carried forward 
indefinitely. Due to these changes under the Tax Act, or potential future ownership changes under Section 382 of 
the Code, we may not be able to realize a tax benefit from the use of our net operating losses, whether or not we 
attain profitability in future years.

84

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

Our principal office is currently located in South San Francisco, California. On August 14, 2019, we entered into 

an amendment to the existing operating lease which will result in a total of 46,074 square feet being leased in 
aggregate from the date the additional leased space become available, which is expected to be September 1, 2020. 
We believe that our existing facilities and other available properties will be sufficient to meet our needs for the 
foreseeable future. 

ITEM 3. LEGAL PROCEEDINGS

We are not currently a party to any material legal proceedings. We may, however, in the ordinary course of 
business face various claims brought by third parties and we may, from time to time, make claims or take legal 
actions to assert our rights, including intellectual property rights as well as claims relating to employment matters 
and the safety or efficacy of our products. Any of these claims could subject us to costly litigation and, while we 
generally believe that we have adequate insurance to cover many different types of liabilities, our insurance carriers 
may deny coverage, may be inadequately capitalized to pay on valid claims, or our policy limits may be inadequate 
to fully satisfy any damage awards or settlements. If this were to happen, the payment of any such awards could 
have a material adverse effect on our operations, cash flows and financial position. Additionally, any such claims, 
whether or not successful, could damage our reputation and business.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

85

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND 
ISSUER PURCHASES OF EQUITY SECURITIES

PART II

Common Stock

Our common stock, $0.001 par value per share, began trading on The Nasdaq Global Select Market on 

June 28, 2018, under the trading symbol "TCDA". 

As of February 27, 2020, there were 348 shareholders of record of our common stock. Certain shares are held 

in "street" name and, accordingly, the number of beneficial owners of such shares is not known or included in the 
foregoing number. 

Dividends

We have never declared or paid any cash dividends on our common stock. We intend to retain earnings for use 

in the operation and expansion of our business. Any future determination to pay dividends will be made at the 
discretion of our board of directors or any authorized committee thereof.

Securities Authorized for Issuance under Equity Compensation Plans

Information regarding the Securities Authorized for Issuance under our Equity Compensation Plans will be 
included in our definitive Proxy Statement, to be filed relating to our 2020 Annual Meeting of Stockholders and is 
incorporated herein by reference.

Unregistered sales of equity securities

None. 

Repurchases of Equity Securities

None. 

Stock Performance Graph

The following graph assumes an initial investment of $100 in our common stock on June 28, 2018, the first date 
that a trade occurred for our stock over-the-counter, as well as the stocks comprising the Nasdaq Composite Index 
(^IXIC) and the stocks comprising the Nasdaq Biotechnology Index (^NBI). All results assume the reinvestment of 
dividends, if any. Historical stockholder return is not necessarily indicative of the performance to be expected for 
any future periods.

86

Use of Proceeds from Initial Public Offering of Common Stock

On July 2, 2018, we closed the sale of 13,455,000 shares of common stock, which includes the additional-
allotment of 1,755,000 shares exercised by the underwriters in the initial public offering, or IPO, to the public at an 
IPO price of $19.00 per share. The offer and sale of the shares in the IPO was registered under the Securities Act 
pursuant to registration statements on Form S-1 (File No. 333-225420), which was filed with the SEC on June 4, 
2018 and amended subsequently and declared effective on June 27, 2018, and Form S-1MEF, which was filed with 
the SEC on June 27, 2018 and became effective on June 27, 2018. The underwriters of the offering were Goldman 
Sachs & Co. LLC, J.P. Morgan Securities LLC and Cowen and Company, LLC.

We raised approximately $237.7 million in net proceeds after deducting underwriting discounts and 

commissions of $17.9 million. No offering expenses were paid directly or indirectly to any of our directors or officers 
(or their associates) or persons owning ten percent or more of any class of our equity securities or to any other 
affiliates.

We invested the funds received in accordance with our investment policy. None of such payments were direct 
or indirect payments to any of our directors or officers (or their associates), to persons owning ten percent or more 
of our common stock or to any other affiliates. As described in our final prospectus filed with the SEC on June 29, 
2018 pursuant to Rule 424(b) under the Securities Act, we continue to expect to use the net proceeds from our IPO 
for supporting our activities for our NDA submission and approval process for veverimer (also known as TRC101), 
manufacturing activities related to veverimer, conducting our safety extension trial, TRCA-301E, and our 
confirmatory postmarketing trial, known as the VALOR-CKD (also known as TRCA-303) trial, commercial expenses 
related to veverimer, interest payments under our Loan and Security Agreement with Hercules Capital, Inc., and the 
remainder for working capital and general corporate purposes. 

87

ITEM 6. SELECTED FINANCIAL DATA

The following tables set forth selected financial and other data. Our historical results are not necessarily 
indicative of the results that may be expected in the future. You should read the financial and other data below in 
conjunction with Item 7. "Management’s Discussion and Analysis of Financial Condition and Results of Operations” 
and the financial statements and related notes included elsewhere in this Annual Report on Form 10-K.

(in thousands, except share and per share amounts)

2019

2018

2017

2016

2015

For the Years Ended December 31,

Statements of Operations and Comprehensive 
Loss Data

Operating expenses:

Research and development

General and administrative

Total operating expenses

$

133,028

$

85,594

$

35,906 $

21,820 $

10,068

45,796

178,824

18,001

103,595

11,216

47,122

5,363

27,183

2,878

12,946

Loss from operations

(178,824)

(103,595)

(47,122)

(27,183)

(12,946)

Change in fair value—preferred stock tranche 

obligation

Other income (expense), net

Interest expense

Loss before income taxes

Income tax benefit

Net loss

—

7,663

(5,744)

—

3,924

(3,137)

5,649

183

—

(1,571)

1,160

103

—

24

—

(176,905)

(102,808)

(41,290)

(28,651)

(11,762)

92

—

—

—

—

(176,813)

(102,808)

(41,290)

(28,651)

(11,762)

Net loss per share, basic and diluted

$

(3.72) $

(4.64) $

(19.32) $

(15.69) $

(9.18)

Weighted-average number of shares outstanding, 

basic and diluted

47,521,237

22,146,192

2,137,690

1,826,040

1,281,585

(in thousands)

Balance Sheets Data

2019

2018

2017

2016

2015

As of December 31,

Cash, cash equivalents and investments

$

354,978

$

243,365

$

67,514 $

26,450 $

Working capital

Total assets

Total liabilities

Convertible preferred stock

Common stock

Accumulated deficit

Total stockholders’ equity (deficit)

272,979

371,826

107,943

—

50

229,543

247,849

53,324

—

42

(369,007)

(192,194)

263,883

194,525

58,202

70,574

11,545

147,070

2

(89,386)

(88,041)

18,963

27,684

8,429

66,883

2

(48,096)

(47,628)

6,855

5,336

8,202

2,445

25,023

2

(19,445)

(19,266)

88

 
 
 ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF 
OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in 
conjunction with our financial statements and related notes included elsewhere in this Annual Report on Form 10-
K. Some of the information contained in this discussion and analysis, including information with respect to our 
plans and strategy for our business, include forward-looking statements that involve risks and uncertainties. 
Investors in our securities should review Item 1A. “Risk Factors” for a discussion of important factors that could 
cause our actual results to differ materially from the results described in or implied by the forward-looking 
statements contained in the following discussion and analysis.

Overview

Our goal is to slow the progression of chronic kidney disease, or CKD, through the treatment of metabolic 

acidosis. We are a pharmaceutical company focused on the development and commercialization of our drug 
candidate, veverimer (also known as TRC101), a non-absorbed, orally-administered polymer designed to treat 
metabolic acidosis by binding and removing acid from the gastrointestinal tract. Metabolic acidosis is a serious 
condition commonly caused by CKD and is believed to accelerate the progression of kidney deterioration. It can 
also lead to bone loss, muscle wasting and impaired physical function. Metabolic acidosis in patients with CKD is 
typically a chronic disease and, as such, requires long-term treatment to mitigate its deleterious consequences.

There are currently no FDA-approved therapies for treating chronic metabolic acidosis. We estimate that 
metabolic acidosis affects approximately 3 million patients with CKD in the United States, and we believe that 
treating metabolic acidosis and slowing the progression of CKD in patients with metabolic acidosis represents a 
significant unmet medical need and market opportunity.

Veverimer is an in-house discovered, new chemical entity. We have a broad intellectual property estate that we 

believe will provide patent protection for veverimer until at least 2034 in the United States, the European Union, 
Japan, China, India and certain other markets.

Veverimer is a low-swelling, spherical polymer bead that is approximately 100 micrometers in diameter. It is a 

single, high molecular weight, crosslinked polyamine molecule. The size of veverimer prevents systemic absorption 
from the GI tract. The high degree of cross-linking within veverimer limits swelling and the overall volume in the GI 
tract, with the goal of facilitating good GI tolerability. The high amine content of veverimer provides proton binding 
capacity of approximately 10 mEq/gram of polymer. The size exclusion built into the three-dimensional structure of 
the polymer enables preferential binding of chloride versus larger inorganic and organic anions, including 
phosphate, citrate, fatty acids and bile acids. This size exclusion mechanism allows a majority of the binding 
capacity to be used for hydrochloric acid binding.

Our New Drug Application, or NDA, for veverimer as a chronic treatment for metabolic acidosis, is currently 
under review by the U.S. Food and Drug Administration, or FDA, through the Accelerated Approval Program. The 
FDA has indicated that it is currently planning to hold a Cardiovascular and Renal Drugs Advisory Committee, or 
CRDAC, meeting to discuss the application. The FDA has assigned a Prescription Drug User Fee Act, or PDUFA, 
goal date of August 22, 2020 for the potential approval to market veverimer in the United States. We are currently 
conducting a confirmatory postmarketing trial, VALOR-CKD (also known as TRCA-303), as part of the Accelerated 
Approval Program.

Results from our positive Phase 3, 12-week efficacy trial, TRCA-301, and a follow-on 40-week extension trial, 

TRCA-301E, formed the primary basis of our NDA submission. The TRCA-301 trial met both its primary and 
secondary endpoints in a highly statistically significant manner (p < 0.0001 for both the primary and secondary 
endpoints). The TRCA-301E trial met its primary and all secondary endpoints. The Lancet published the results of 
the TRCA-301 trial in March 2019 and the results of the TRCA-301E trial in June 2019.

Tricida is led by a seasoned management team that includes the founder of Ilypsa, Inc. and Relypsa, Inc. Our 
management team has extensive experience in the development and commercialization of therapeutics, with deep 
expertise in developing polymers for the treatment of kidney-related diseases

We have no products approved for marketing, and we have not generated any revenue from product sales or 

other arrangements. From our inception in 2013 through December 31, 2019, we have primarily funded our 
operations through the sale of $152.4 million of convertible preferred stock, net proceeds of $237.7 million from our 
initial public offering, or IPO, on July 2, 2018, net proceeds of $217.9 million from our underwritten public offering on 

89

April 8, 2019, and net borrowing of $57.1 million after fees of $2.9 million under the Loan and Security Agreement, 
or Term Loan, entered into with Hercules Capital Inc., or Hercules, on February 28, 2018. We have incurred losses 
in each year since our inception in 2013. Our net losses were $176.8 million, $102.8 million and $41.3 million for the 
years ended December 31, 2019, 2018 and 2017, respectively. As of December 31, 2019, we had an accumulated 
deficit of $369.0 million. Substantially all of our operating losses resulted from expenses incurred in connection with 
advancing veverimer through development activities and general and administrative costs associated with our 
operations.

We expect to continue to incur significant expenses and increasing operating losses for at least the next several 

years. Our net losses may fluctuate significantly from quarter to quarter and year to year. We expect our expenses 
will increase substantially in connection with our ongoing activities as we:

•

•

•

•

•

•

•

conduct clinical studies of veverimer, including the VALOR-CKD trial;

optimize the scale-up of the manufacturing process and increase drug substance manufacturing for 
veverimer for planned clinical study materials, and upon a successful validation campaign, commercial 
launch materials;

increase our research and development efforts;

hire additional personnel;

create additional infrastructure to support our product development;

seek regulatory approval for veverimer;

engage in commercial launch activities;

• maintain, expand and protect our intellectual property portfolio; and

•

add operational, financial and management information systems to support ongoing operations, including 
operating as a public company.

We do not expect to generate any revenue from product sales until we successfully complete development and 

obtain regulatory approval for veverimer. If we obtain regulatory approval for veverimer, we expect to incur 
significant commercialization expenses related to product sales, marketing, manufacturing and distribution. 
Accordingly, we will seek to fund our operations through available cash from our prior equity offerings and financing 
under the Hercules facility, and, as necessary, through additional public or private equity or debt financings or other 
sources. However, we may be unable to raise additional funds or enter into such other arrangements when needed 
on favorable terms or at all. Our failure to raise capital or enter into such other arrangements when needed would 
have a negative impact on our financial condition and ability to develop veverimer.

Components of Our Results of Operations

Research and Development Expense

Research and development expense consists primarily of costs associated with the development of veverimer 

and include salaries, benefits, travel and other related costs, including stock-based compensation expense, for 
personnel engaged in research and development functions; expenses incurred under agreements with contract 
research organizations, or CROs, investigative sites and consultants that conduct our nonclinical and clinical 
studies; manufacturing development, optimization and scale-up expenses and the cost of acquiring and 
manufacturing clinical study materials and commercial materials; payments to consultants engaged in the 
development of veverimer, including stock-based compensation, travel and other expenses; costs related to 
compliance with quality and regulatory requirements; research and development facility-related expenses, which 
include direct and allocated expenses, and other related costs. Research and development expense is charged to 
operations as incurred when these expenditures relate to our research and development efforts and have no 
alternative future uses. Payments made prior to the receipt of goods or services to be used in research and 
development are capitalized until the goods or services are received.

All of our research and development expense to date has been incurred in connection with veverimer. We 

expect our research and development expense to increase for the foreseeable future as we optimize our 

90

manufacturing processes and advance veverimer through clinical development, including our VALOR-CKD trial. The 
process of conducting clinical studies necessary to obtain regulatory approval is costly and time consuming and the 
successful development of veverimer is highly uncertain. As a result, we are unable to determine the duration and 
completion costs of our research and development projects or when, and to what extent, we will generate revenue 
from commercialization and sale of veverimer, if approved. Therefore, we are unable to estimate with any certainty 
the costs we will incur in the continued development of veverimer. The degree of success, timelines and cost of 
development can differ materially from expectations. We may never succeed in achieving regulatory approval for 
veverimer.

General and Administrative Expense

General and administrative expense consists primarily of salaries, related benefits, travel, stock-based 

compensation expense and facility-related expenses for personnel in finance and administrative functions. General 
and administrative expense also includes professional fees for legal, patent, consulting, accounting and audit 
services, pre-commercial preparation for the potential launch of veverimer and other related costs.

We anticipate that our general and administrative expense will increase in the future as we continue to build our 

infrastructure to support our continued research and development of veverimer. We also anticipate increased 
expenses related to accounting, legal and regulatory-related services associated with maintaining compliance with 
exchange listing and the Securities and Exchange Commission, or SEC, requirements, director and officer 
insurance premiums and other costs associated with being a public company.

Results of Operations

The following table presents our results of operations for the years ended December 31, 2019, 2018 and 2017.

(in thousands)

Operating expenses:

Research and development

General and administrative

Total operating expenses

Years Ended December 31,

2019

2018

2017

2019 vs. 2018
%

$

2018 vs. 2017
%

$

$ 133,028

$ 85,594

$ 35,906

$ 47,434

55 % $ 49,688

138 %

45,796

18,001

178,824

103,595

11,216

47,122

27,795

75,229

154 %

6,785

60 %

73 % 56,473

120 %

Loss from operations

(178,824)

(103,595)

(47,122)

(75,229)

73 % (56,473)

120 %

Change in fair value—preferred stock tranche 

obligation

Other income (expense), net

Interest expense

Loss before income taxes

Income tax benefit

Net loss

N/M = Not meaningful

Research and Development Expense

—

7,663

3,924

(5,744)

(3,137)

—

5,649

—

3,739

(2,607)

N/M

95 %

83 %

(5,649)

(100)%

3,741

(3,137)

N/M

N/M

183

—

(176,905)

(102,808)

(41,290)

(74,097)

72 % (61,518)

149 %

92

—

—

92

N/M

—

N/M

$ (176,813) $(102,808) $ (41,290) $(74,005)

72 % $(61,518)

149 %

The following table presents our research and development expense for the years ended December 31, 2019, 

2018 and 2017.

(in thousands)

Clinical development costs

Personnel and related costs

Stock-based compensation expense

Other research and development costs

Years Ended December 31,

2019

2018

2017

$ 99,961

$ 68,483

$ 28,774

2019 vs. 2018
%
46 % $ 39,709

2018 vs. 2017
%
138 %

$

$

$ 31,478

14,840

13,547

4,680

10,466

5,127

4,374

42 %

2,643

4,002

379

10,904

413 %

1,626

678

17 %

5,339

2,264

2,376

104 %

N/M

146 %

138 %

Total research and development expense

$133,028

$ 85,594

$ 35,906

$ 47,434

55 % $ 49,688

91

Research and development expense increased by $47.4 million for the year ended December 31, 2019 

compared with the year ended December 31, 2018. The increase was due to activities in connection with our 
veverimer clinical development program, resulting in increased clinical development costs of $31.5 million related to 
our VALOR-CKD trial, scale-up costs related to the optimization of our manufacturing process and the veverimer 
NDA application fee, partially offset by reduced expenditures associated with our TRCA-301 trial completed in May 
2018, our drug-drug interaction studies completed in March 2019 and our TRCA-301E trial completed in March 
2019; increased personnel and related costs of $4.4 million related to headcount growth; increased stock-based 
compensation expense of $10.9 million related to headcount growth, performance awards granted in 2019 and 
higher fair values of awards granted; and increased other research and development costs of $0.7 million, primarily 
related to facilities and office expenses.

Research and development expense increased by $49.7 million for the year ended December 31, 2018 

compared with the year ended December 31, 2017. The increase was due to activities in connection with our 
veverimer clinical development program, resulting in increased clinical development costs of $39.7 million related to 
initiation and enrollment of our VALOR-CKD trial, our TRCA-301E trial and our drug-drug interaction studies, scale-
up costs related to the optimization of our manufacturing process and drug substance manufacturing; increased 
personnel and related costs of $5.3 million related to headcount growth; increased stock-based compensation 
expense of $2.3 million related to headcount growth and higher fair values of awards granted; and increased other 
research and development costs of $2.4 million, primarily related to facilities and office expenses.

General and Administrative Expense

The following table presents our general and administrative expense for the years ended December 31, 2019, 

2018 and 2017.

(in thousands)

Years Ended December 31,

2019

2018

2017

Personnel and related costs

$ 12,441

$ 6,760

$ 5,886

2019 vs. 2018
%
84 % $

$

$ 5,681

2018 vs. 2017
%
15 %

874

$

Stock-based compensation expense

Other general and administrative costs

11,621

21,734

2,509

8,732

497

9,112

363 %

4,833

13,002

149 %

2,012

3,899

Total general and administration expense

$ 45,796

$ 18,001

$ 11,216

$ 27,795

154 % $ 6,785

405 %

81 %

60 %

General and administrative expense increased by $27.8 million for the year ended December 31, 2019 

compared with the year ended December 31, 2018. The increase was due to pre-commercialization and 
administrative activities in connection with our veverimer clinical development program, resulting in increased 
personnel and related costs of $5.7 million primarily due to headcount growth; increased stock-based compensation 
expense of $9.1 million due to headcount growth, performance awards granted in 2019 and higher fair value of 
awards granted; and additional other general and administrative costs of $13.0 million, which primarily related to 
pre-commercialization costs, legal services and business insurance premium.

General and administrative expense increased by $6.8 million for the year ended December 31, 2018 compared 
with the year ended December 31, 2017. The increase was due to activities in connection with our veverimer clinical 
development program, resulting in increased personnel and related costs of $0.9 million primarily related to 
headcount growth, increased stock-based compensation expense of $2.0 million due to headcount growth and 
higher fair values of awards granted and additional other general and administrative expenses of $3.9 million, which 
primarily related to legal and audit services, facilities and office expenses. 

Change in Fair Value—Preferred Stock Tranche Obligation

The fair value of the Series C preferred stock tranche obligation was determined considering the terms of the 
convertible preferred stock agreement and the fair value of the Series C stock relative to the contractual purchase 
price for the tranche. At issuance, the Series C preferred stock tranche obligation was considered to be a contingent 
obligation, where the investors had agreed to invest at a price of $1.55 per share upon achievement of a specified 
milestone.

The Series C preferred stock tranche obligation was modeled as a warrant within the Black-Scholes option 

pricing model framework as of December 2016. The various assumptions used to determine the fair value of the 
Series C preferred stock tranche obligation in the Black-Scholes option pricing model were time to liquidity of 2.4 

92

years, volatility of 54.0%, risk-free interest rate of 1.3% and equity value of $91.4 million. The fair value of the 
tranche obligation was determined to be a liability and recorded at $3.4 million as of December 31, 2016.

On April 25, 2017, the tranche obligation was settled, and the obligation was valued at intrinsic value, using the 

fair value of the Series C convertible preferred stock from the Black-Scholes option pricing model. The various 
assumptions used to determine the fair value of the Series C convertible preferred stock in the Black-Scholes option 
pricing model were time to liquidity of 2.4 years, volatility of 54.0%, risk-free interest rate of 1.4% and equity value of 
$118.5 million. Since per share value was lower than the contractual purchase price, the fair value of the tranche 
obligation was determined to be an asset and recorded at $2.3 million at settlement on April 25, 2017, which 
resulted in a mark-to-market adjustment of $5.6 million for the year ended December 31, 2017.

Liquidity and Capital Resources

Sources of Liquidity

From our inception in 2013 through December 31, 2019, we have primarily funded our operations through the 
sale of $152.4 million of convertible preferred stock, net proceeds of $237.7 million from our IPO on July 2, 2018, 
net proceeds of $217.9 million from our underwritten public offering on April 8, 2019 and net borrowing of $57.1 
million under the Term Loan. As of December 31, 2019, we had cash, cash equivalents and short-term and long-
term investments of $355.0 million.

Hercules Loan and Security Agreement

On February 28, 2018, we entered into the Term Loan with Hercules. The Term Loan provided for a loan in an 

aggregate principal amount of up to $100.0 million to be funded in five tranches subject to certain performance-
based milestones. The first tranche, in the amount of $25.0 million, was funded on the closing date of the Term 
Loan.

On October 15, 2018, we entered into the second amendment to the Term Loan with Hercules, which amended 

certain terms of the Term Loan. After giving effect to the second amendment, the Term Loan continued to provide 
for a loan in an aggregate principal amount of up to $100.0 million to be funded in five tranches subject to certain 
performance-based milestones. The second tranche was reduced from $25.0 million to $15.0 million and was 
funded on December 28, 2018.

On March 27, 2019, we modified the Term Loan with Hercules by entering into the third amendment to the Term 
Loan. After giving effect to the third amendment, the amount available under the Term Loan was increased from up 
to $100.0 million to up to $200.0 million to be funded in tranches, subject to certain performance-based milestones, 
and the maturity of the Term Loan was extended. Under the terms of the Term Loan, as amended by the third 
amendment, the $40.0 million of principal outstanding under the Term Loan at the date of modification remains 
outstanding, and additional tranches of $20.0 million and $15.0 million available for draw down prior to December 
15, 2019 and December 15, 2020, respectively. An additional tranche of $75.0 million will be available for draw 
down between January 1, 2020 and December 15, 2020, on the condition that we obtain final approval from the 
FDA for the NDA for veverimer. A final tranche of $50.0 million will be available for draw down on or prior to 
December 15, 2021, upon our request and the approval of Hercules' investment committee. On December 13, 
2019, the third tranche of the Term Loan was funded in the amount of $20.0 million. 

The Term Loan bears interest at a floating per annum interest rate equal to the greater of either (i) 8.35% or (ii) 
the lesser of (x) 8.35% plus the prime rate as reported in The Wall Street Journal minus 6.00% and (y) 9.85%. The 
maturity date is extended to April 1, 2023, and may be extended to April 1, 2024 if the tranche of $75.0 million 
described above is drawn. We will initially be making interest-only payments until April 1, 2021. If we achieve certain 
performance milestones and financial covenants, the interest-only period could be extended for up to an additional 
24 months. Upon expiration of the interest-only period, we will repay the Term Loan in equal monthly installments 
comprised of principal and interest, based on a 30-month amortization schedule, through maturity. We will pay an 
additional amount of (a) $2.6 million due on March 1, 2022 and (b) the product of 7.55 % and the aggregate loans 
funded under the Term Loan due at maturity or on any earlier date on which the loans become due. If we prepay 
the Term Loan, we will be required to pay a prepayment charge equal to (i) 2.00% of the amount being prepaid at 
any time during the first 12 months following the effective date of the third amendment (ii) 1.50% of the amount 
being prepaid after 12 months but prior to 24 months following the effective date of the third amendment (iii) 1.00% 
of the amount being prepaid after 24 months but prior to 36 months following the effective date of the third 

93

amendment and (iv) zero if prepaid any time after 36 months following the effective date of the third amendment but 
prior to the maturity.

The Term Loan is secured by substantially all of our assets, except our intellectual property, which is the subject 

of a negative pledge; however, the collateral does consist of rights to payments and proceeds from the sale, 
licensing or disposition of all or any part of, or rights in, our intellectual property. Under the Term Loan, we are 
subject to certain covenants, including but not limited to requirements to deliver financial reports at designated times 
of the year and maintain a minimum level of cash. These covenants also limit or restrict our ability to incur additional 
indebtedness or liens, acquire, own or make any investments, pay cash dividends, repurchase stock or enter into 
certain corporate transactions, including mergers and changes of control. 

Funding Requirements

We have incurred losses and negative cash flows from operations since our inception in 2013 and anticipate 

that we will continue to incur net losses for the foreseeable future. As of December 31, 2019, we had an 
accumulated deficit of $369.0 million. We expect to incur additional losses in the future to conduct research and 
development and to conduct pre-commercialization activities and recognize that we may need to raise additional 
capital to fully implement our business plan.

Such future capital requirements are difficult to forecast and will depend on many factors, including:

•

•

•

•

•

•

•

•

our ability to initiate, and the progress and results of, our planned clinical studies of veverimer;

the timing and outcome of regulatory reviews of veverimer;

the findings of the FDA during their routine inspections of our facility and the facilities of our contract 
manufacturers and clinical trial sites during the NDA review process and our ability to promptly and 
adequately address any such findings;

the revenue, if any, received from commercial sales of veverimer for which we may receive regulatory 
approval;

our ability to maintain and enforce our intellectual property rights and defend any intellectual property-
related claims;

the costs, timing and success of the scale-up and optimization of the process of manufacturing veverimer, 
and our minimum and maximum commitments under the Manufacturing and Commercial Supply Agreement 
we entered into with Patheon Austria GmbH & Co KG on October 4, 2019;

the costs, timing and success of future commercialization activities, including product manufacturing, 
marketing, sales and distribution, for veverimer if we receive regulatory approval and do not partner for 
commercialization; and

the extent to which we acquire or in-license other products and technologies.

Until such time, if ever, as we can generate substantial product revenue, we expect to finance our cash needs 

through a combination of equity offerings, debt financings, collaborations, strategic partnerships and licensing 
arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, 
the ownership interest of our stockholders will be or could be diluted, and the terms of these securities may include 
liquidation or other preferences that adversely affect the rights of our common stockholders. If we raise additional 
funds through collaborations, strategic partnerships or licensing arrangements with third parties, we may have to 
relinquish valuable rights to veverimer, associated intellectual property, our other technologies, future revenue 
streams or research programs or grant licenses on terms that may not be favorable to us.

However, there can be no assurance that we will be successful in securing additional funding at levels sufficient 

to fund our operations or on terms acceptable to us. If we are unsuccessful in our efforts to raise additional 
financing, we could be required to significantly reduce operating expenses and delay, reduce the scope of or 
eliminate some of our development programs or our future commercialization efforts, out-license intellectual 
property rights to our product candidates and sell unsecured assets, or a combination of the above, any of which 
may have a material adverse effect on our business, results of operations, financial condition and/or our ability to 
fund our scheduled obligations on a timely basis or at all. 

94

On July 2, 2018, we completed our IPO and issued and sold an aggregate of 13,455,000 shares of common 
stock, including the underwriters’ exercise in full of their over-allotment option, a public offering price of $19.00 per 
share. Net proceeds were approximately $237.7 million, after deducting underwriting discounts and commissions.

On April 8, 2019, we consummated an underwritten public offering and issued 6,440,000 shares of common 
stock, which included the exercise in full by the underwriters of their option to purchase 840,000 additional shares of 
common stock at an offering price of $36.00 per share for net proceeds of approximately $217.9 million, after 
deducting underwriting discounts and commissions of $13.9 million.

Cash Flows

The following table summarizes the net cash flow activity for the years ended December 31, 2019, 2018 and 

2017.

(in thousands)

Net cash provided by (used in)

Operating activities

Investing activities

Financing activities

Years Ended December 31,

2019

2018

2017

$

(129,590) $

(94,856) $

(40,401)

(127,498)

(148,354)

(37,947)

238,490

270,608

82,440

4,092

Net increase (decrease) in cash and cash equivalents

$

(18,598) $

27,398

$

Cash Used in Operating Activities

During the year ended December 31, 2019, cash used in operating activities was $129.6 million, which 
consisted of a net loss of $176.8 million, adjusted by non-cash charges of $26.1 million and changes in our 
operating assets and liabilities of $21.1 million. The non-cash charges consisted primarily of stock-based 
compensation of $25.2 million, amortization of Term Loan discount and issuance costs of $2.2 million, amortization 
of operating lease right-of-use assets of $1.0 million, changes in fair value of compound derivative liability and 
warrants of $0.8 million and depreciation and amortization of $0.8 million, partially offset by net amortization of 
premiums and discounts on investments of $3.7 million. The changes in our operating assets and liabilities were 
primarily due to an increase in accrued expenses and other current liabilities of $26.0 million, partially offset by a 
decrease in accounts payable of $2.6 million, an increase in prepaid expenses and other assets of $1.5 million and 
a decrease in operating lease liabilities of $0.7 million.

During the year ended December 31, 2018, cash used in operating activities was $94.9 million, which consisted 

of a net loss of $102.8 million, adjusted by non-cash charges of $5.8 million and changes in our operating assets 
and liabilities of $2.1 million. The non-cash charges consisted primarily of stock-based compensation of $5.2 million, 
amortization of Term Loan discount and issuance costs of $1.3 million and depreciation and amortization of $0.6 
million, partially offset by net amortization of premiums and discounts on investments of $1.1 million. The changes 
in our operating assets and liabilities were primarily due to an increase in accounts payable of $4.6 million, partially 
offset by an increase in prepaid expenses and other assets of $1.3 million and a decrease in accrued expenses and 
other current liabilities of $1.1 million.

During the year ended December 31, 2017, cash used in operating activities was $40.4 million, which consisted 

of a net loss of $41.3 million, adjusted by changes in our operating assets and liabilities of $5.4 million and non-
cash charges of $4.5 million. The changes in our operating assets and liabilities were primarily due to an increase in 
accrued expenses and other current liabilities of $4.8 million and an increase in accounts payable of $1.8 million, 
partially offset by an increase in prepaid and other assets of $1.2 million. The non-cash charges consisted primarily 
of changes in the fair value of our preferred stock tranche financing obligation by $5.6 million, partially offset by 
stock-based compensation of $0.9 million and depreciation and amortization of $0.3 million.

95

 
Cash Used in Investing Activities

Net cash used in investing activities was $127.5 million, $148.4 million and $37.9 million for the years ended 
December 31, 2019, 2018 and 2017, respectively. The net cash used in investing activities during the year ended 
December 31, 2019 was primarily due to purchases of investments of $497.5 million and purchases of property and 
equipment of $1.4 million, partially offset by maturities of investments of $371.4 million. The net cash used in 
investing activities during the year ended December 31, 2018 was primarily due to purchases of investments of 
$233.9 million and purchases of property and equipment of $0.9 million, partially offset by maturities of investments 
of $86.4 million. The net cash used in investing activities during the year ended December 31, 2017 was primarily 
due to purchases of investments of $76.8 million and purchases of property and equipment of $1.0 million, partially 
offset by maturities of investments of $39.9 million.

Cash Provided by Financing Activities

Net cash provided by financing activities was $238.5 million, $270.6 million and $82.4 million for the years 
ended December 31, 2019, 2018 and 2017, respectively. The net cash provided by financing activities during the 
year ended December 31, 2019 was primarily the result of net proceeds from our equity offering of $217.9 million, 
the Term Loan funding, net of issuance costs, of $18.6 million and proceeds from the issuance of common stock 
under equity incentive plans of $3.0 million, partially offset by payments of offering costs of $0.9 million. The net 
cash provided by financing activities during the year ended December 31, 2018 was primarily the result of net 
proceeds from our IPO of $237.7 million, the Term Loan funding, net of issuance costs, of $38.5 million and 
proceeds from the issuance of common stock under equity incentive plans of $0.6 million, partially offset by 
payments of offering costs of $6.6 million. The net cash provided by financing activities during the year ended 
December 31, 2017 was the result of net proceeds from our sale of convertible preferred stock which comprised of 
$25.2 million of Series C convertible preferred stock, net of issuance costs of $65,000 and $57.3 million of Series D 
convertible preferred stock, net of issuance costs of $0.3 million.

Off-Balance Sheet Arrangements

During the periods presented, we did not have, nor do we currently have, any off-balance sheet arrangements 

as defined under the rules of the SEC.

Contractual Obligations

We have contractual obligations from our operating lease, manufacturing and service contracts, Term Loan and 

tenant improvement loan, and other research and development activities. The following table summarizes our 
contractual obligations as of December 31, 2019. 

(in thousands)
Term Loan(1)
Lease obligations(2)

Tenant improvement loan
Manufacturing and service contracts(3)

December 31, 2019

Total

Less than 
One Year

One to 
Three Years

Three to 
Five Years

More than 
Five Years

$

72,865

$

5,038

$

47,934

$

19,893

$

20,774

140

600,269

1,309

93

64,354

5,018

47

5,953

—

83,107

113,202

339,606

—

8,494

—

Total contractual obligations and commitments

$ 694,048

$

70,794

$ 136,106

$ 139,048

$ 348,100

(1) The long-term debt obligation is comprised of the Third Amended to the Loan and Security Agreement that was executed during March 

2019.

(2) These amounts are comprised of the rent payments on our existing lease and on the third amendment to the existing operating lease 

which will commence on September 2020 under our amended lease that was executed on August 14, 2019.

(3) The purchase obligations are comprised of our non-cancelable purchase commitments under our Manufacturing and Commercial 
Supply Agreement with Patheon. These amounts are based on forecasts that may include estimates of our future market demand, 
quantity discounts and manufacturing efficiencies.

We also enter into other contracts in the normal course of business with CROs, contract development and 

manufacturing organizations and other service providers and vendors. These contracts generally provide for 
termination on short notice and are cancelable contracts and accordingly, are not included in the contractual 
obligations and disclosures summarized above.

96

Critical Accounting Policies and Significant Judgments and Estimates

Our management’s discussion and analysis of financial condition and results of operations is based on our 
financial statements, which have been prepared in accordance with generally accepted accounting principles in the 
United States. The preparation of these financial statements requires us to make estimates and assumptions that 
affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date 
of the financial statements, as well as the reported expenses during the reporting periods. These items are 
monitored and analyzed by us for changes in facts and circumstances, and material changes in these estimates 
could occur in the future. We base our estimates on historical experience and on various other factors that we 
believe are reasonable under the circumstances, the results of which form the basis for making judgments about the 
carrying value of assets and liabilities that are not readily apparent from other sources. Changes in estimates are 
reflected in reported results for the period in which they become known. Actual results may differ significantly from 
these estimates under different assumptions or conditions.

While our significant accounting policies are more fully described in Note 2. "Summary of Significant Accounting 

Policies" to our financial statements included in this Annual Report on Form 10-K, we believe that the following 
accounting policies related to (i) research and development expenses and (ii) stock-based compensation involve 
significant judgments and estimates used in the preparation of our financial statements.

Research and Development Expenses

Research and development costs are expensed as incurred. Non-refundable advance payments for goods or 

services that will be used or rendered for future research and development activities are recorded as a prepaid 
expense and recognized as an expense as the related goods are delivered or the related services are performed.

As part of the process of preparing our financial statements, we are required to estimate our accrued research 
and development expenses. This process involves reviewing contracts and purchase orders, communicating with 
internal personnel and external service providers to identify services that have been performed on our behalf, and 
estimating the level of service performed and the associated cost incurred for the service when we have not yet 
been invoiced or otherwise notified of the actual cost. The majority of our service providers invoice us monthly in 
arrears for services performed. We make estimates of our accrued expenses as of each balance sheet date in our 
financial statements based on facts and circumstances known to us at that time. We periodically confirm the 
accuracy of our estimates with the service providers and make adjustments if necessary.

We base our expenses related to clinical trials on our estimates of the services received and efforts expended 
pursuant to contracts with multiple research institutions, contract research organizations that conduct and manage 
clinical trials on our behalf and contract manufacturing organizations that manage drug production on our behalf. 
The financial terms of these agreements are subject to negotiation, vary from contract to contract, and may result in 
uneven payment flows and expense recognition. In accruing service fees, we estimate the time period over which 
services will be performed and the level of effort to be expended in each period. If the actual timing of the 
performance of services or the level of effort varies from our estimate, we adjust the accrual accordingly. 
Furthermore, all additional identified costs incurred are accrued from all outside third-party service providers.

Our understanding of the status and timing of services performed relative to the actual status and timing of 
services performed may vary and may result in our reporting changes in estimates in any particular period. To date, 
there have been no material differences between our estimates and the amount actually incurred. However, due to 
the nature of these estimates, we cannot assure you that we will not make changes to our estimates in the future as 
we become aware of additional information about the status or conduct of our clinical studies or other research 
activity.

Stock-Based Compensation

Stock-based compensation expense represents the grant-date fair value of awards recognized over the 

requisite service period of the awards (usually the vesting period) on a straight-line basis or by using an accelerated 
attribution method for awards with a performance condition. For stock options and shares purchased under our 
Employee Stock Purchase Plan, or ESPP, we estimate the grant-date fair value, and the resulting stock-based 
compensation expense, using the Black-Scholes option-pricing model. For restricted stock units, or RSUs, the 
grant-date fair value is the closing price of our common stock on the date of grant as reported on The Nasdaq 
Global Select Market. 

97

The Black-Scholes option-pricing model requires the derivation and use of subjective assumptions to determine 

the estimated fair value of stock option awards. These assumptions include:

•

•

•

•

Expected Term—We have concluded that our stock option exercise history does not provide a reasonable 
basis upon which to estimate expected term, and therefore we use the simplified method for estimating the 
expected term of stock option grants. Under this approach, the weighted-average expected term is 
presumed to be the average of the vesting term and the contractual term of the option.

Expected Volatility— Beginning in the fourth fiscal quarter of 2019, expected volatility is estimated using a 
weighted-average historical volatility for our common stock and the historical volatility of the common stock 
of a representative group of comparable publicly traded biopharmaceutical companies over a period equal 
to the expected term of the stock option grants. Prior to the fourth fiscal quarter of 2019, since our common 
stock did not have significant trading history, the expected volatility was estimated based on the average 
volatility for comparable publicly traded biopharmaceutical companies over a period equal to the expected 
term of the stock option grants. The comparable companies were chosen based on their similar size, stage 
in the life cycle or area of specialty. We will continue to use comparable company information until the 
historical volatility of our common stock is sufficient to measure expected volatility for future option grants.

Risk-Free Interest Rate—The risk-free interest rate is based on the U.S. Treasury zero coupon issues in 
effect at the time of grant for periods corresponding with the expected term of the award.

Dividend Yield—We have not paid dividends on our common stock and do not anticipate paying dividends 
for the foreseeable future, and we therefore used an expected dividend yield of zero.

In addition to the Black-Scholes assumptions, we include an estimated forfeiture rate in the calculation of stock-
based compensation related to stock options and RSUs based on an analysis of our actual forfeitures. We evaluate 
the adequacy of the forfeiture rate based on actual forfeiture experience, analysis of employee turnover behavior 
and other factors at each reporting period and when we find that actual forfeitures differ materially from our 
estimates, we record a cumulative adjustment to stock-based compensation expense in that reporting period. 

We expect the impact of our stock-based compensation expense to continue to grow in future periods due to 

the potential increases in the value of our common stock and the number of awards we expect to grant.

We issue incentive and non-statutory stock options and RSUs under the 2018 Equity Incentive Plan, or 2018 

Plan, to certain directors, officers, employees and consultants in consideration for services provided to us. 
Generally, incentive stock options and non-statutory stock options granted under the 2018 Plan have provided for 
vesting over a four-year period from either the date of grant or the commencement of service. To date, all RSUs 
have been granted to directors and vest on the earlier of the one-year anniversary of the award's date of grant, or 
the date of the Company’s next annual meeting of stockholders that occurs following the date of grant. The 2018 
Plan allows the option holders to exercise their options prior to vesting. Unvested common stock is issued upon the 
early exercise of options and are subject to repurchase by us at the original exercise price at our option.

Recent Accounting Pronouncements

For details regarding recent accounting pronouncements, see Note 2. "Summary of Significant Accounting 

Policies" to our financial statements included in this Annual Report on Form 10-K. 

98

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk

We are exposed to market risk related to changes in interest rates. We consider all highly liquid investments 

with maturities at the date of purchase of three months or less to be cash equivalents. We maintain significant 
amounts of cash at one or more financial institutions that are in excess of federally insured limits and have highly 
liquid short-term investments.

The primary objective of our investment activities is to preserve capital to fund our operations. We classify our 

short-term and long-term investments as available-for-sale in our financial statements. Available-for-sale 
investments are carried at fair value, with unrealized gains and losses reported as a component of accumulated 
other comprehensive loss. Realized gains and losses on the sale of all such securities are reported in other income 
(expense), net and computed using the specific identification method. For the years ended December 31, 2019, 
2018 and 2017 there were no realized gains or losses on these securities. The Company’s investments are in U.S. 
government agency securities, commercial paper, corporate debt securities and asset-backed securities. Pursuant 
to the company’s investment policy, all purchased securities have a minimum short-term rating of A1 (Moody’s) or 
P1 (Standard & Poor’s) or equivalent. If there is no short-term rating, a purchased security is required to have a 
long-term rating no lower than A3/A- or equivalent.

Our investments are subject to interest rate risk and could fall in value if market interest rates increase. A 

hypothetical 10% relative change in interest rates during any of the periods presented would not have had a 
material impact on our financial statements.

Foreign Exchange Risk

The majority of our transactions occur in U.S. dollars. However, we do have certain transactions with CROs and 

contract manufacturing organizations that are denominated in currencies other than the U.S. dollar, primarily the 
Euro, and we therefore are subject to foreign exchange risk. The fluctuation in the value of the U.S. dollar against 
the Euro, or other non-U.S. dollar denominated transactions, affects the reported amounts of expenses, assets and 
liabilities associated with a limited number of nonclinical and clinical activities. We do not engage in any hedging 
activity to reduce our potential exposure to currency fluctuations. A hypothetical 10% change in foreign exchange 
rates during any of the periods presented would not have had a material impact on our financial statements.

Effects of Inflation

Inflation generally affects us by increasing our cost of labor and clinical study costs. We do not believe that 

inflation has had a material effect on our results of operations during the periods presented.

99

ITEM 8. FINANCIAL STATEMENTS

TRICIDA, INC.

INDEX TO FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm
Balance Sheets
Statements of Operations and Comprehensive Loss
Statements of Convertible Preferred Stock and Stockholders' Equity (Deficit)
Statements of Cash Flows

Notes to Financial Statements

Page 
Number

101
103
104
105
106

107

100

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and the Board of Directors of Tricida, Inc.:

Opinion on the Financial Statements

We have audited the accompanying balance sheets of Tricida, Inc. (the Company) as of December 31, 2019 

and 2018, and the related statements of operations and comprehensive loss, convertible preferred stock and 
stockholders’ equity (deficit), and cash flows for each of the three years in the period ended December 31, 2019, 
and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements 
present fairly, in all material respects, the financial position of the Company at December 31, 2019 and 2018, and 
the results of its operations and its cash flows for each of the three years in the period ended December 31, 2019, 
in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board 

(United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2019, based 
on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring 
Organizations of the Treadway Commission (2013 framework), and our report dated March 2, 2020 expressed an 
unqualified opinion thereon.

Adoption of New Accounting Standard

As discussed in Note 2 to the financial statements, the Company changed its method for accounting for leases 
in 2019 as a result of the adoption of Accounting Standards Update (ASU) No. 2016-02, Leases (Topic 842), using 
the alternative modified transition method.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to 
express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm 
registered with the PCAOB and are required to be independent with respect to the Company in accordance with the 
U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission 
and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we 

plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of 
material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks 
of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that 
respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and 
disclosures in the financial statements. Our audits also included evaluating the accounting principles used and 
significant estimates made by management, as well as evaluating the overall presentation of the financial 
statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial 

statements that was communicated or required to be communicated to the audit committee and that: (1) relates to 
accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, 
subjective or complex judgments. The communication of the critical audit matter does not alter in any way our 
opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter 
below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

101

Description of the 
Matter

How We Addressed the 
Matter in Our Audit

Accrued clinical and nonclinical study costs

During 2019, the Company incurred $133.0 million for research and development 
expenses and as of December 31, 2019 accrued $8.3 million for clinical and nonclinical 
study costs. As described in Note 2 of the Financial Statements, a substantial portion of 
the Company’s ongoing research and development activities are conducted by third-
party service providers, including clinical research organizations (“CROs”). External 
costs to be paid to CROs are accrued and expensed based upon estimates of actual 
work completed in accordance with signed agreements. The Company estimates the 
cost of the services not yet invoiced by these service organizations through discussions 
and other correspondence with internal personnel and the service organizations as to 
the progress or stage of completion of the services and the agreed-upon fees to be paid 
for such services.

Auditing management’s accounting for accrued clinical and nonclinical study costs is 
especially challenging because the evaluation is dependent upon a high-volume of data 
and input exchanged between clinical personnel and third-party service providers, such 
as the number of sites activated, the number of patients enrolled, the number of patient 
visits, which is tracked in spreadsheets and other end user computing programs.

Additionally, due to the long duration of clinical-related development activities and the 
timing of invoices received from third parties, the determination of the accrual for 
services incurred requires application of judgment by management. Any delays in the 
receipt of information related to certain activities in determining the progress to 
completion of specific tasks conducted for each project can increase the risk of 
inaccurate assumptions applied to project completion when establishing the cut-off and 
concluding completeness of costs to be accrued for.

We obtained an understanding, evaluated the design and tested the operating 
effectiveness of controls over the Company’s accounting for accrued clinical and 
nonclinical study expenses, including controls over management’s review of clinical trial 
progress in comparison to budgets and invoices received from third parties, and over the 
completeness and accuracy of data used in the accrual determination. 

To test accrued clinical and nonclinical study expenses, our audit procedures included, 
among others, testing the accuracy and completeness of the underlying inputs used in 
management’s analysis to determine costs incurred. We inspected the terms and 
conditions of material vendor contracts and change orders, assessed patient visits, pass-
through costs, and clinical site costs, and audited the cost models to track progress on 
service agreements. We evaluated estimated services incurred by third parties by 
understanding the terms and timeline of significant projects, evaluating management’s 
estimate of work performed and costs incurred, and obtaining external confirmation of 
key terms and conditions and other key inputs to the accrual calculation, such as the 
number of patient visits and number of sites activated, for a sample of contracts.  
Further, we inspected invoices received from third parties after the balance sheet date 
and performed a lookback analysis to evaluate the completeness of clinical and 
nonclinical study accruals.

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 2017.

Redwood City, California
March 2, 2020

102

TRICIDA, INC.

BALANCE SHEETS
(in thousands, except share and per share amounts)

Assets

Current assets:

Cash and cash equivalents

Short-term investments

Prepaid expenses and other current assets

Total current assets

Long-term investments

Property and equipment, net

Operating lease right-of-use assets

Total assets

Liabilities and Stockholders’ Equity

Current liabilities:

Accounts payable

Current operating lease liabilities

Accrued expenses and other current liabilities

Total current liabilities

Term Loan

Non-current operating lease liabilities

Other long-term liabilities

Total liabilities

Commitments and contingencies (Note 7)
Stockholders’ equity:

December 31, 
2019

December 31, 
2018

$

18,574

$

289,424

4,744

312,742

46,980

2,728

9,376

37,172

203,906

3,269

244,347

2,287

1,215

—

$

$

371,826

$

247,849

5,911

$

1,072

32,780

39,763

58,374

8,783

1,023

8,460

—

6,344

14,804

38,071

—

449

107,943

53,324

Preferred stock,$0.001 par value; 40,000,000 shares authorized, no shares issued or 
outstanding as of December 31, 2019 and December 31, 2018

Common stock, $0.001 par value; 400,000,000 shares authorized as of December 31, 
2019 and December 31, 2018; 49,763,176 and 42,148,247 shares issued and 
outstanding as of December 31, 2019 and December 31, 2018, respectively

Additional paid-in capital

Accumulated other comprehensive income (loss)

Accumulated deficit

Total stockholders’ equity

—

50

632,647

193

(369,007)

263,883

Total liabilities and stockholders’ equity

$

371,826

$

See accompanying notes to financial statements.

—

42

386,830

(153)

(192,194)

194,525

247,849

103

TRICIDA, INC.

STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(in thousands, except share and per share amounts)

Operating expenses:

Research and development

General and administrative

Total operating expenses

Loss from operations

Change in fair value—preferred stock tranche obligation

Other income (expense), net

Interest expense

Loss before income taxes

Income tax benefit

Net loss

Other comprehensive income (loss):

Years Ended December 31,

2019

2018

2017

$

133,028

$

85,594

$

45,796

178,824

18,001

103,595

(178,824)

(103,595)

—

7,663

(5,744)

—

3,924

(3,137)

35,906

11,216

47,122

(47,122)

5,649

183

—

(176,905)

(102,808)

(41,290)

92

—

—

(176,813)

(102,808)

(41,290)

Net unrealized gain (loss) on available-for-sale-investments, net of tax

346

(140)

Total comprehensive loss

Net loss per share, basic and diluted

$

$

(176,467) $

(102,948) $

(3.72) $

(4.64) $

(13)

(41,303)

(19.32)

Weighted-average number of shares outstanding, basic and diluted

47,521,237

22,146,192

2,137,690

See accompanying notes to financial statements.

104

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TRICIDA, INC.

STATEMENTS OF CASH FLOWS
(in thousands)

Years Ended December 31,

2019

2018

2017

$

(176,813) $

(102,808) $

(41,290)

Operating activities:

Net loss

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization

Amortization of operating lease right-of-use assets

Accretion (amortization) of premiums and discounts on investments

Amortization of Term Loan discount and issuance costs

Stock-based compensation

Changes in fair value of compound derivative liability and warrants

Changes in fair value of preferred stock tranche obligation

Other non-cash items

Changes in operating assets and liabilities:

Prepaid expenses and other assets

Accounts payable

Accrued expenses and other liabilities

Operating lease liabilities

Net cash used in operating activities

Investing activities:

Purchase of investments

Maturities of investments

Purchase of property and equipment

Net cash used in investing activities

Financing activities:

Proceeds from equity offerings, net

Payments of offering costs

Proceeds from exercise of common stock under equity incentive plans

Proceeds from issuance of convertible preferred stock, net

Proceeds from leasehold improvement loan

Repayments of leasehold improvement loan

Proceeds (payments) under Term Loan, net

Net cash provided by financing activities

Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents at beginning of year

Cash and cash equivalents at end of year

Supplemental disclosures

Cash paid for interest

Supplemental disclosures of non-cash investing and financing activities

Right-of-use assets obtained in exchange for lease obligations

Warrants and compound derivative liability related to Term Loan

Purchase of property and equipment in accounts payable and accrued 
expenses

Series C fair value of preferred stock obligation upon closing

$

$

$

$

$

$

757

964

(3,698)

2,173

25,168

816

—

(92)

(1,492)

(2,621)

25,955

(707)

618

—

(1,094)

1,316

5,152

(188)

—

—

(1,338)

4,573

(1,087)

—

335

—

(42)

—

876

—

(5,649)

—

(1,157)

1,757

4,769

—

(129,590)

(94,856)

(40,401)

(497,492)

371,417

(1,423)

(127,498)

217,930

(921)

3,036

—

—

(106)

18,551

238,490

(18,598)

37,172

(233,928)

86,429

(855)

(148,354)

237,750

(6,564)

632

85

276

(113)

38,542

270,608

27,398

9,774

18,574

$

37,172

$

3,348

$

1,612

$

8,084

535

820

$

$

$

— $

1,693

27

$

$

(76,846)

39,903

(1,004)

(37,947)

—

—

14

82,465

—

(39)

—

82,440

4,092

5,682

9,774

—

—

—

—

— $

— $

2,278

See accompanying notes to financial statements.

106

TRICIDA, INC.

NOTES TO FINANCIAL STATEMENTS

NOTE 1. ORGANIZATION AND BASIS OF PRESENTATION

Organization—Tricida, Inc, or the Company, was incorporated in the state of Delaware on May 22, 2013 and 
was granted its certification of qualification in the state of California on August 5, 2013, or inception. The Company 
is focused on the development and commercialization of its drug candidate, veverimer (also known as TRC101), a 
non-absorbed, orally-administered polymer designed to treat metabolic acidosis in patients with chronic kidney 
disease. 

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 
December 31, 2019, the Company has relied primarily on the proceeds from equity offerings and debt financing to 
finance its operations. 

The Company recognizes that it may need to raise additional capital to fully implement its business plan, and if 
market conditions are favorable or if the Company identifies specific strategic opportunities or needs, intends to do 
so through the issuance of equity, borrowings, or strategic alliances with partner companies. However, if such 
financing is not available at adequate levels or on reasonable terms, 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 product 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.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 

Basis of Presentation— The accompanying financial statements have been prepared in accordance with 

accounting principles generally accepted in the United States (U.S. GAAP).

Use of Estimates—The preparation of financial statements in conformity with U.S. GAAP requires the 
Company to make estimates and assumptions that affect the amounts reported in the financial statements and 
accompanying notes. Actual results could differ from those estimates.

Cash and Cash Equivalents—All highly liquid investments with maturities at the date of purchase of three 

months or less are classified as cash equivalents. There are no restrictions on cash and cash equivalents.

Investments—The Company's investments are in U.S. government securities, commercial paper, corporate 
debt securities and asset-backed securities. All investments with maturities of greater than three months at the date 
of purchase and maturities of less than one year at the reporting date are classified as short-term investments, 
while investments with maturities of a year or more at the reporting date are classified as long-term investments. 
The Company has classified its investments as available-for-sale in the accompanying financial statements. 
Available-for-sale investments are carried at fair value, with unrealized gains and losses reported as a component of 
accumulated other comprehensive income (loss). Realized gains and losses on the sale of all such securities are 
reported in other income (expense), net and are computed using the specific identification method.

All of the Company's investments are subject to a periodic impairment review. The Company recognizes an 

impairment charge when a decline in the fair value of investments below the cost basis is judged to be other-than-
temporary and would mark the security to market through a change to the statement of operations and 
comprehensive loss. In determining whether a decline in market value is other-than-temporary, various factors are 
considered, including the cause, duration of time and severity of the impairment, any adverse changes in the 
investees’ financial condition, and the Company’s intent and ability to hold the security for a period of time sufficient 
to allow for an anticipated recovery in market value. There were no investments deemed to be impaired as of 
December 31, 2019.

Concentration of Credit Risk and Other Risks and Uncertainties—Financial instruments that potentially 
subject the Company to a concentration of credit risk, consist primarily of cash, cash equivalents, short-term and 
long-term investments. The Company maintains deposits in federally insured financial institutions in excess of 

107

federally insured limits. Management believes that these financial institutions are financially sound, and, 
accordingly, minimal credit risk exists with respect to those financial institutions. The Company is exposed to credit 
risk in the event of default by the financial institutions holding its cash, cash equivalents, short-term and long-term 
investments and by the issuers of the securities to the extent recorded in the balance sheet.

The Company is dependent on third-party manufacturers to supply products for research and development 
activities in its programs and prepare for the commercial launch of veverimer. In particular, the Company relies and 
expects to continue to rely on a small number of manufacturers to supply it with its requirements for the active 
pharmaceutical ingredient and drug product related to these programs. These programs could be adversely affected 
by a significant interruption in the supply of active pharmaceutical ingredients and formulated drugs.

Property and Equipment—Property and equipment are stated at cost, less accumulated depreciation and 

amortization. Depreciation is determined using the straight-line method over the estimated useful lives of the 
respective assets, which is three years. Leasehold improvements are amortized using the straight-line method over 
the shorter of the lease term or their estimated useful economic lives.

Impairment of Long-Lived Assets—Long-lived assets consist of property and equipment. The Company 
assesses potential impairment losses on long-lived assets used in operations when events and circumstances 
indicate that assets might be impaired. If such events or changes in circumstances arise, the Company compares 
the carrying amount of the long-lived assets to the estimated future undiscounted cash flows expected to be 
generated by the long-lived assets. If the estimated aggregate undiscounted cash flows are less than the carrying 
amount of the long-lived assets, an impairment charge, calculated as the amount by which the carrying amount of 
the assets exceeds the fair value of the assets, is recorded. The fair value of the long-lived assets is determined 
based on the estimated discounted cash flows expected to be generated from the long-lived assets. The Company 
has not recognized any impairment losses in the years ended December 31, 2019, 2018 and 2017.

Deferred Offering Costs—The Company capitalizes certain legal, professional accounting and other third-

party fees that are directly associated with in-process equity financings as deferred offering costs until such 
financings are consummated. After consummation of the equity financing, these costs are recorded in the 
statements of convertible preferred stock and stockholders’ equity (deficit) as a reduction of additional paid-
in capital generated as a result of the equity financing. 

Clinical and Manufacturing Accruals—The Company records accruals for the estimated costs of research, 
nonclinical and clinical studies and manufacturing development, which are a significant component of research and 
development expenses. A substantial portion of the Company’s ongoing research and development activities is 
conducted by third-party service providers, including clinical research organizations, or CROs, and contract 
manufacturing organizations, or CMOs. The Company’s contracts with CROs generally include pass-through fees 
such as regulatory expenses, investigator fees, travel costs and other miscellaneous costs, including shipping and 
printing fees. The financial terms of these contracts are subject to negotiations, which vary from contract to contract 
and may result in payment flows that do not match the periods over which materials or services are provided to the 
Company under such contracts. The Company accrues the costs incurred under agreements with these third parties 
based on estimates of actual work completed in accordance with the respective agreements. The Company 
determines the estimated costs through the review of contracts and subsequent discussions with internal personnel 
and external service providers as to the progress or stage of completion of the services and the agreed-upon fees 
to be paid for such services.

The Company makes significant judgments and estimates in determining the accrual balance in each reporting 
period. As actual costs become known, the Company adjusts its accruals. Although the Company does not expect 
its estimates to be materially different from amounts actually incurred, the Company’s understanding of the status 
and timing of services performed relative to the actual status and timing of services performed may vary and could 
result in the Company reporting amounts that are too high or too low in any particular period. The Company’s 
accrual is dependent, in part, upon the receipt of timely and accurate reporting from information provided as part of 
its clinical and nonclinical studies and other third-party vendors. For the three years ended December 31, 2019, 
2018, and 2017, there have been no material differences from the Company’s accrued estimated expenses to the 
actual clinical trial and manufacturing expenses. However, variations in the assumptions used to estimate accruals, 
including, but not limited to the number of patients enrolled, the rate of patient enrollment, the actual services 
performed, and the amount of manufactured drug substance and/or drug product, and related costs may vary from 
the Company’s estimates, resulting in adjustments to research and development expense in future periods. 
Changes in these estimates that result in material changes to the Company’s accruals could materially affect its 
financial position and results of operations.

108

Leases—The Company determines if an arrangement contains a lease at inception. For arrangements where 
the Company is the lessee, operating leases are included in operating lease right-of-use, or ROU, assets; current 
operating lease liabilities; and non-current operating lease liabilities on its balance sheets. The Company currently 
does not have any finance leases.

Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the 

future minimum lease payments over the lease term at the commencement date. ROU assets also include any 
initial direct costs incurred and any lease payments made on or before the lease commencement date, less lease 
incentives received. The Company uses its incremental borrowing rate based on the information available at the 
commencement date in determining the lease liabilities as the Company’s leases generally do not provide an 
implicit rate. The incremental borrowing rate is reevaluated upon a lease modification. The operating lease ROU 
asset also includes any initial direct costs and prepaid lease payments made less any lease incentives. The 
Company considered information available at the adoption date of Topic 842 to determine the incremental 
borrowing rate for leases in existence as of this date. Lease terms may include options to extend or terminate the 
lease when the Company is reasonably certain that the option will be exercised. Lease expense is recognized on a 
straight-line basis over the lease term.

The Company elected to apply each of the practical expedients described in Accounting Standards Codification 
(ASC) Topic 842-10-65-1(f) which allow companies not to reassess: (i) whether any expired or existing agreements 
contain leases, (ii) the classification of any expired or existing leases, and (iii) the capitalization of initial direct costs 
for any existing leases. The Company also elected to apply the short-term lease measurement and recognition 
exemption in which ROU assets and lease liabilities are not recognized for short-term operating leases. A short-
term is a lease that, at the commencement date, has a lease term of 12 months or less and does not include an 
option to purchase the underlying asset that the lessee is reasonably certain to exercise.

Term Loan—The Company accounts for the Loan and Security Agreement, or Term Loan, with Hercules 

Capital, Inc., or Hercules, as a liability measured at net proceeds less debt discount and is accreted to the face 
value of the Term Loan over its expected term using the effective interest method. The Company considers whether 
there are any embedded features in its debt instruments that require bifurcation and separate accounting as 
derivative financial instruments pursuant to Accounting Standards Codification, or ASC, Topic 815, Derivatives and 
Hedging.

Convertible Preferred Stock—The Company recorded all shares of convertible preferred stock at their 

respective fair values, net of issuance costs, on the dates of issuance. Upon the closing of the Initial Public Offering, 
or IPO, on July 2, 2018, the 104,225,638 shares of convertible preferred stock outstanding were automatically 
converted into 26,187,321 shares of common stock. 

Warrants—The Company issued freestanding warrants to purchase shares of common stock in connection 
with its Term Loan. The warrants are recorded at fair value using the Black-Scholes option pricing model. See Note 
6 "Borrowings" to these financial statements for additional details.

Preferred Stock Tranche Obligation—The Company entered into convertible preferred stock financings 
where, in addition to the initial closing, investors agreed to buy, and the Company agreed to sell, additional shares 
of that convertible preferred stock at a set price in the event that certain agreed milestones are achieved (a 
tranched financing). The Company evaluated this tranche obligation and determined that it met the definition of a 
freestanding instrument, and accordingly, determined the fair value of this obligation and recorded it on the balance 
sheet with the residual of the proceeds raised being allocated to convertible preferred stock. The preferred stock 
tranche obligation was revalued each reporting period with changes in the fair value of the obligation recorded as a 
component of other income (expense), net in the statements of operations and comprehensive loss. The preferred 
stock tranche obligation was revalued at settlement and the resultant fair value was then reclassified to convertible 
preferred stock at that time.

Research and Development Expense—Research and development expense is charged to the statements of 

operations and comprehensive loss in the period in which they are incurred. Research and development expense 
consists primarily of salaries and related costs, including stock-based compensation expense, for personnel and 
consultants in our research and development functions; fees paid to clinical consultants, clinical trial sites and 
vendors, including CROs, costs related to pre-commercialization manufacturing activities including payments to 
CMOs and other vendors and consultants, costs related to regulatory activities, expenses related to lab supplies 
and services and depreciation and other allocated facility-related and overhead expenses. Nonrefundable advance 
payments for goods or services to be received in the future for use in research and development activities are 

109

deferred and capitalized. The capitalized amounts are expensed as the related goods are delivered or the services 
are performed.

Stock-Based Compensation—Stock-based compensation expense represents the grant-date fair value of 

awards recognized on a straight-line basis or by using an accelerated attribution method for awards with 
performance conditions over the employee's requisite service period (generally the vesting period). The Black-
Scholes option-pricing model is used to calculate stock-based compensation expense for stock option awards and 
shares purchased under the Employee Stock Purchase Plan, or ESPP. For restricted stock units, or RSUs, the 
grant-date fair value is the closing price of the Company's common stock on the date of grant as reported on The 
Nasdaq Global Select Market. Because stock compensation expense is an estimate of awards ultimately expected 
to vest, it is reduced by an estimate for future forfeitures. Forfeitures are estimated at the time of grant and revised, 
if necessary, in subsequent periods if actual forfeitures differ from estimates.

The Company records the expense attributed to nonemployee services paid with stock option awards based on 
the estimated fair value of the awards determined using the Black-Scholes option pricing model. The measurement 
of stock-based compensation for nonemployees was previously subject to remeasurement as the options vested. 
As of July 1, 2018, the Company adopted ASU 2018-07, Improvements to Nonemployee Share-Based Payment 
Accounting, which no longer subjects nonemployee awards to remeasurement. The expense is recognized over the 
period during which services are received.

Income Taxes—The Company accounts for income taxes using the liability method, whereby deferred tax 
asset and liability account balances are determined based on differences between the financial reporting and tax 
bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the 
differences are expected to reverse. The Company provides a valuation allowance when it is more likely than not 
that some portion or all of its deferred tax assets will not be realized.

The Company accounts for income tax contingencies using a benefit recognition model. If it considers that a tax 

position is more likely than not to be sustained upon audit, based solely on the technical merits of the position, it 
recognizes the benefit. The Company measures the benefit by determining the amount that is greater than 50% 
likely of being realized upon settlement, presuming that the tax position is examined by the appropriate taxing 
authority that has full knowledge of all relevant information. The Company’s policy is to recognize interest and 
penalties related to the underpayment of income taxes as a component of income tax expense or benefit. To date, 
there have been no interest or penalties charged in relation to the unrecognized tax benefits.

Comprehensive Loss—Comprehensive loss is comprised of net loss and other comprehensive income (loss). 

Other comprehensive loss includes changes in stockholders’ equity (deficit) that are excluded from net loss, 
primarily unrealized gains or losses on the Company’s available-for-sale investments. These changes in 
stockholders' equity are reflected net of tax.

Net Loss per Share—Basic net loss per share is calculated by dividing the net loss by the weighted-average 

number of shares of common stock outstanding during the period, without consideration for common stock 
equivalents. Diluted net loss per share is the same as basic net loss per share, since the effects of potentially 
dilutive securities are antidilutive given the net loss for each period presented.

Segment Reporting—The Company manages its operations as a single operating segment for the purposes of 

assessing performance and making operating decisions. All of the Company's assets are maintained in the United 
States.

Recent Accounting Pronouncements

Adopted Standards

In February 2016, the Financial Accounting Standards Board (FASB) issued Topic 842, which amended prior 

accounting standards for leases. The Company adopted Topic 842 on January 1, 2019, using the alternative 
modified transition method, which applies the standard as of the effective date and therefore, the Company has not 
applied the standard to the comparative periods presented on the Company's financial statements.

The Company elected the following practical expedients when assessing the transition impact available to 
lessees: (i) not to reassess whether any expired or existing contracts as of January 1, 2019, are or contain leases; 

110

(ii) not to reassess the lease classification for any expired or existing leases as of January 1, 2019; and (iii) not to 
reassess initial direct costs for any existing leases as of January 1, 2019.

As a lessee, the primary impact of the adoption of Topic 842 was the recognition of operating lease ROU assets 

of $2.3 million and operating lease liabilities of $2.5 million on its balance sheet as of January 1, 2019. See Note 4 
"Leases" for additional details.

Standards Not Yet Effective

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement 
of Credit Losses on Financial Instruments, or ASU 2016-13. ASU 2016-13 implements an impairment model, known 
as the current expected credit loss model, based on expected losses rather than incurred losses. Under the new 
guidance, an entity will recognize, as an allowance, its estimate of expected credit losses. The ASU is effective for 
interim and annual periods beginning after December 15, 2019, with early adoption permitted. The Company does 
not expect the adoption of ASU 2016-13 will have a significant impact on its financial statements.

In September 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure 
Framework - Changes to the Disclosure Requirements for Fair Value Measurement, which amends ASC Topic 
820, Fair Value Measurement and Disclosures, or ASU 2018-13. The FASB issued final guidance that eliminates, 
adds and modifies certain disclosure requirements for fair value measurements as part of its disclosure framework 
project. Under the ASU, entities will no longer be required to disclose the amount of transfers between Level 1 and 
Level 2 of the fair value hierarchy. Public companies will be required to disclose changes in unrealized gains and 
losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at 
the end of the reporting period and the range and weighted average used to develop significant unobservable inputs 
for Level 3 fair value measurements. ASU 2018-13 is effective for public business entities for annual reporting 
periods, and interim periods within those annual periods, beginning after December 15, 2019, with early adoption 
permitted. The Company plans to adopt this guidance on January 1, 2020. The Company does not expect the 
adoption of ASU 2018-13 will have a significant impact on its financial statements.

In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting 
for Income Taxes, or ASU 2019-12, which simplifies the accounting for income taxes. ASU 2019-12 is effective for 
public business entities for annual reporting periods, and interim periods within those annual periods, beginning 
after December 15, 2020 on a prospective basis, and early adoption is permitted. The Company does not expect 
the adoption of ASU 2019-12 will have a significant impact on its financial statements.

NOTE 3. FAIR VALUE MEASUREMENTS AND FAIR VALUE OF FINANCIAL INSTRUMENTS 

The fair value of the Company’s financial assets and liabilities are determined in accordance with the fair value 

hierarchy established in Topic 820 issued by the FASB. Topic 820 defines fair value as the exchange price that 
would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous 
market for the asset or liability in an orderly transaction between market participants on the measurement date. The 
fair value hierarchy of Topic 820 requires an entity to maximize the use of observable inputs when measuring fair 
value and classifies those inputs into three levels:

Level 1—Observable inputs, such as quoted prices in active markets;

Level 2—Inputs, other than the quoted prices in active markets, which are observable either directly or indirectly 
such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that 
are observable or can be corroborated by observable market data for substantially the full term of the instrument’s 
anticipated life; and

Level 3—Unobservable inputs in which there is little or no market data, which require the reporting entity to 

develop its own assumptions. 

The Company's policy is to recognize transfers in and out of Level 1, 2 and 3 as of the end of the reporting 
period. There were no transfers of assets or liabilities between the fair value measurement levels during the years 
ended December 31, 2019 and 2018. 

Our financial instruments consist primarily of cash and cash equivalents, short-term and long-term investments, 

accounts payable and the Term Loan with Hercules. 

111

Cash, cash equivalents and investments are reported at their respective fair values on Company's balance 
sheets. Where quoted prices are available in an active market, securities are classified as Level 1. The Company 
classifies money market funds as Level 1. When quoted market prices are not available for the specific security, 
then the Company estimates fair value by using quoted prices for identical or similar instruments in markets that are 
not active and model-based valuation techniques for which all significant inputs are observable in the market or can 
be corroborated by observable market data for substantially the full term of the assets. Where applicable, these 
models project future cash flows and discount the future amounts to a present value using market-based 
observable inputs obtained from various third-party data providers, including but not limited to benchmark yields, 
reported trades and broker/dealer quotes. Where applicable, the market approach utilizes prices and information 
from market transactions for similar or identical assets. The Company classifies U.S. government agency securities, 
commercial paper, corporate debt securities and asset-backed securities as Level 2. The Company's short-term and 
long-term investments are classified as available-for-sale. 

The following tables set forth the value of the Company's financial assets remeasured on a recurring basis 
based on the three-tier fair value hierarchy by significant investment category as of December 31, 2019 and 2018.

December 31, 2019

Reported as:

Amortized 
Cost

Gross 
Unrealized 
Gains

Gross 
Unrealized 
Losses

Fair Value

Cash and 
Cash 
Equivalents

Short-term 
Investments

Long-term 
investments

$

1,393

$

— $

— $

1,393

$

1,393

$

— $

(in thousands)

Cash

Level 1:

Money market fund

17,181

—

—

17,181

17,181

—

Level 2:

U.S. government agency 
securities

Commercial paper

Corporate debt securities

Asset-backed securities

Subtotal

40,741

108,248

185,569

1,561

336,119

6

107

205

3

321

(14)

(2)

(20)

—

(36)

40,733

108,353

185,754

1,564

336,404

—

—

—

—

—

19,990

108,353

159,517

1,564

289,424

Total assets measured at fair 

value

$ 354,693

$

321

$

(36) $ 354,978

$

18,574

$ 289,424

$

46,980

December 31, 2018

Reported as:

Amortized 
cost

Gross 
Unrealized 
Gains

Gross 
Unrealized 
Losses

Fair Value

Cash and 
Cash 
Equivalents

Short-term 
Investments

Long-term 
investments

$

3,021

$

— $

— $

3,021

$

3,021

$

— $

(in thousands)

Cash

Level 1:

Money market fund

33,154

Level 2:

Commercial paper

Corporate debt securities

Asset-backed securities

Subtotal

68,467

89,038

49,838

207,343

Total assets measured at fair 

value

$ 243,518

$

—

—

4

3

7

7

—

33,154

33,154

—

(63)

(63)

(34)

68,404

88,979

49,807

(160)

207,190

997

—

—

997

67,407

86,692

49,807

203,906

$

(160) $ 243,365

$

37,172

$ 203,906

$

2,287

Interest income related to the Company's cash, cash equivalents and available-for-sale investments included in 

other income (expense), net was approximately $8.7 million, $3.5 million and $0.4 million for the years ended 
December 31, 2019, 2018 and 2017, respectively. There were no gross realized gains and gross realized losses for 
the years presented.

112

—

—

20,743

—

26,237

—

46,980

—

—

—

2,287

—

2,287

The following table summarizes the Company's available-for-sale investments that were in a continuous 

unrealized loss position but were not deemed to be other-than-temporarily impaired, as of December 31, 2019 and 
2018.

(in thousands)

December 31, 2019

December 31, 2018

Fair Value

Unrealized 
Losses

Fair Value

Unrealized 
Losses

U.S. government agency securities

$

24,235

$

(14) $

— $

Commercial paper

Corporate debt securities

Asset-backed securities

Total

5,426

38,668

—

(2)

(20)

—

67,407

85,699

36,730

$

68,329

$

(36) $

189,836

$

(160)

—

(63)

(63)

(34)

The Company held a total of 18 and 48 positions which were in an unrealized loss position as of December 31, 
2019 and 2018, respectively. All available-for-sale investments in an unrealized loss position were in a continuous 
loss position for less than 12 months. As of December 31, 2019, unrealized losses on available-for-sale investments 
were not attributable to credit risk. The Company determined that there were no other-than-temporary impairments 
as of December 31, 2019 and 2018 because the Company does not intend to sell these securities nor does the 
Company believe that it will be required to sell these securities before the recovery of their amortized cost basis. 

The following table summarizes the maturities of the Company’s cash equivalents (excluding money market 

funds) and available-for-sale investments, as of December 31, 2019.

(in thousands)

Mature in less than one year

Mature in one to five years

Total

Amortized Cost

Fair Value

$

$

289,156

$

46,963

336,119

$

289,424

46,980

336,404

The following table presents a reconciliation of financial liabilities measured at fair value on a recurring basis 

using Level 3 unobservable inputs for the years ended December 31, 2019 and 2018.

(in thousands)

Fair value at beginning of year

Additions

Change in fair value

Reclassification to equity

Issuance of convertible preferred stock on exercise of warrant

Fair value at end of year

2019

Compound 
Derivative 
Liability

2018

Compound 
Derivative 
Liability

Warrant
Liability

$

$

161 $

— $

—

816

—

—

654

(493)

—

—

977 $

161

$

106

156

305

(194)

(373)

—

The following table presents information about significant unobservable inputs related to the Company's Level 3 

financial liabilities as of December 31, 2019.

(in thousands)

Fair 
Value

Valuation Technique

Significant Unobservable Input

Input

December 31, 2019

Compound derivative liability

$977 Discounted cash flow Discount rate

Probability of the occurrence of certain events

10.7 %

20.0 %

Term Loan

The estimated fair value of the Term Loan was $59.2 million and $37.8 million as of December 31, 2019 and 
2018, respectively, and is classified as Level 3. The key valuation assumptions used to calculate the fair value of 
the Term Loan as of December 31, 2019 consist of the discount rate of 10.7% and the probability of occurrence of 
certain events of 20.0%.

113

NOTE 4. LEASES

In July 2014, the Company entered into a five-year noncancelable operating lease for its offices and laboratory 

space in South San Francisco, California that was scheduled to expire in June 2019, with an option for the 
Company to extend the lease for an additional three years. In August 2017, the Company entered into an 
amendment which extended the existing operating lease to June 2021 and added 13,258 square feet of additional 
lease space resulting in a total of 26,987 square feet being leased in the aggregate under the amended lease. In 
November 2017, the Company entered into a second amendment which reduced the common areas resulting in a 
total of 26,897 square feet being leased in aggregate under the second amendment. 

On August 14, 2019, the Company entered into a third amendment to the existing operating lease which will 
extend the leased space by an additional 19,177 square feet, or Second Expansion Premises, and will result in a 
total of 46,074 square feet being leased in aggregate. The operating lease for the Second Expansion Premises will 
commence on the date they are delivered to the Company, which is expected to be September 1, 2020 (the Second 
Expansion Premises Commencement Date). In conjunction with the third amendment, the Company also agreed to 
lease 5,569 square feet of temporary office space effective August 15, 2019 to the Second Expansion Premises 
Commencement Date. The third amendment will extend the lease by 84 months from the Second Expansion 
Premises Commencement Date, with an option to extend the lease for an additional 36 months subject to certain 
conditions. The Company determined that the Second Expansion Premises shall be accounted for as a new lease 
at the Second Expansion Premises Commencement Date. Further, the Company determined that the amendment 
to the existing operating lease and temporary office space shall be accounted as a lease modification as of 
September 30, 2019. The Company recognized an operating lease ROU asset of $8.1 million and operating lease 
liability of $8.1 million on its balance sheet upon the execution of the third amendment on August 14, 2019, and will 
measure and record an additional ROU asset and operating lease liability for the Second Expansion Premises upon 
the Second Expansion Premises Commencement Date.

Operating lease expense was $1.3 million, $1.0 million and $0.7 million for the years ended December 31, 
2019, 2018 and 2017. Operating cash flows for the year ended December 31, 2019 included $1.1 million in cash 
payments for operating leases. Expense related to short-term leases was not significant for the year ended 
December 31, 2019.

The following table presents the maturity analysis of the Company's operating lease liabilities showing the 

aggregate lease payments as of December 31, 2019.

(in thousands)

2020

2021

2022

2023 and thereafter

Total lease payments(1)

Less: imputed interest

Total operating lease liabilities

December 31, 
2019

$

$

1,108

1,377

1,662

8,434

12,581

(2,726)

9,855

(1) As noted above, the operating lease for the Second Expansion Premises will commence in fiscal year 2020 

and therefore the lease related to the Second Expansion Premises is not recognized on the balance sheet as of 
December 31, 2019. As of December 31, 2019, future minimum lease payments related to the Second Expansion 
Premises are expected to be $8.2 million over the lease term of 7.0 years. 

Operating lease liabilities are based on the net present value of the remaining lease payments over the 
remaining lease term. In determining the present value of lease payments, the Company uses its incremental 
borrowing rate. The weighted average incremental borrowing rate used to determine the operating lease liabilities 
as of December 31, 2019 was 6.0%. The Company's weighted average remaining lease term was 7.7 years as of 
December 31, 2019.

114

ASC Topic 840 Disclosures

The Company elected the alternative modified transition method. The following table presents the future 
minimum lease commitments under the Company’s operating leases as of December 31, 2018 as previously 
disclosed under prior lease accounting standards.

(in thousands)

2019

2020

2021

2022 and thereafter

Total future minimum lease payments

NOTE 5. OTHER BALANCE SHEET COMPONENTS 

Property and Equipment, Net

December 31, 
2018

$

$

1,076

1,108

562

—

2,746

The following table presents the components of property and equipment, net as of December 31, 2019 and 

2018. 

(in thousands)

Furniture and fixtures

Computer and lab equipment

Leasehold improvements

Less: accumulated depreciation and amortization

Total property and equipment, net

December 31, 
2019

December 31, 
2018

$

$

265

$

3,867

1,244

5,376

(2,648)

2,728

$

193

1,888

1,055

3,136

(1,921)

1,215

Depreciation and amortization expense was approximately $0.8 million, $0.6 million and $0.3 million for the 

years ended December 31, 2019, 2018 and 2017, respectively. 

Accrued Expenses and Other Current Liabilities

The following table presents the components of accrued expenses and other current liabilities as of December 

31, 2019 and 2018.

(in thousands)

Accrued clinical and nonclinical study costs

Accrued contract manufacturing

Accrued compensation

Accrued professional fees and other

Total accrued expenses and other current liabilities

December 31, 
2019

December 31, 
2018

$

$

8,343

$

17,343

3,367

3,727

32,780

$

2,168

1,676

1,565

935

6,344

115

NOTE 6. BORROWINGS

Term Loan

On February 28, 2018, the Company entered into the Term Loan with Hercules. The Term Loan provided for a 

loan in an aggregate principal amount of up to $100.0 million to be funded in five tranches subject to certain 
performance-based milestones. The first tranche, in the amount of $25.0 million, was funded on the closing date of 
the Term Loan. 

On October 15, 2018, the Company and Hercules entered into the second amendment to the Term Loan, which 
amended certain terms of the Term Loan. After giving effect to the second amendment, the Term Loan continued to 
provide for a loan in an aggregate principal amount of up to $100.0 million to be funded in five tranches subject to 
certain performance-based milestones. The second tranche was reduced from $25.0 million to $15.0 million and 
was funded on December 28, 2018. The Company accounted for the second amendment as a modification to the 
existing Term Loan. 

On March 27, 2019, the Company modified the Term Loan with Hercules by entering into the third amendment 

to the Term Loan. After giving effect to the third amendment, the amount available under the Term Loan is 
increased from up to $100.0 million to up to $200.00 million to be funded in tranches, subject to certain 
performance-based milestones, and the maturity of the Term Loan is extended. Under the terms of the Term Loan, 
as amended by the third amendment, the $40.0 million principal outstanding under the Term Loan at the date of the 
modification remains outstanding, and additional tranches of $20.0 million and $15.0 million will be available for 
draw down prior to December 15, 2019 and December 15, 2020, respectively. An additional tranche 
of $75.0 million will be available for draw down between January 1, 2020 and December 15, 2020, on the condition 
that the Company obtains final approval from the U.S. Food and Drug Administration, or FDA, for the New Drug 
Application, or NDA, for veverimer. A final tranche of $50.0 million will be available for draw down on or prior to 
December 15, 2021, upon request by the Company and the approval of Hercules' investment committee. The 
Company accounted for the third amendment as a modification to the existing Term Loan. On December 13, 2019, 
the third tranche of the Term Loan was funded in the amount of $20.0 million. 

The Term Loan bears interest at a floating per annum interest rate equal to the greater of either (i) 8.35% or 

(ii) the lesser of (x) 8.35% plus the prime rate as reported in The Wall Street Journal minus 6.00% and (y) 9.85%. 
The maturity date is extended to April 1, 2023 and may be extended to April 1, 2024 if the tranche of $75.0 million 
described above is drawn. The Company will initially be making interest-only payments until April 1, 2021. If the 
Company achieves certain performance milestones and financial covenants, the interest-only period could be 
extended for up to an additional 24 months. Upon expiration of the interest-only period, the Company will repay the 
Term Loan in equal monthly installments comprised of principal and interest, based on a 30-month amortization 
schedule, through maturity. The Company will pay an additional amount of (a) $2.6 million due on March 1, 2022 
and (b) the product of 7.55% and the aggregate loans funded under the Term Loan due at maturity or on any earlier 
date on which the loans become due. If the Company prepays the Term Loan, the Company will be required to pay 
a prepayment charge equal to (i) 2.00% of the amount being prepaid at any time during the first 12 months following 
the effective date of the third amendment (ii) 1.50% of the amount being prepaid after 12 months but prior to 24 
months following the effective date of the third amendment (iii) 1.00% of the amount being prepaid after 24 months 
but prior to 36 months following the effective date of the third amendment and (iv) zero if prepaid any time after 36 
months following the effective date of the third amendment but prior to the maturity. 

The Term Loan is secured by substantially all of the Company's assets, except its intellectual property, which is 

the subject of a negative pledge; however, the collateral does consist of rights to payments and proceeds from the 
sale, licensing or disposition of all or any part of, or rights in, its intellectual property. Under the Term Loan, the 
Company is subject to certain covenants, including but not limited to requirements to deliver financial reports at 
designated times of the year and maintain a minimum level of cash. These covenants also limit or restrict the 
Company's ability to incur additional indebtedness or liens, acquire, own or make any investments, pay cash 
dividends, repurchase stock or enter into certain corporate transactions, including mergers and changes of control. 

Warrants

In conjunction with the Term Loan entered into on February 28, 2018, the Company issued a warrant to 

Hercules to purchase 53,458 shares of its common stock with an exercise price of $9.35 per share. The estimated 
fair value of the warrant at the date of issuance was approximately $0.2 million. The fair value of the common stock 
warrant liability was determined using the probability-weighted expected return method. It was recorded at its fair 

116

value at inception and was remeasured at each financial reporting period with any changes in fair value being 
recognized as a component of other income (expense), net in the accompanying statements of operations and 
comprehensive loss.

On April 10, 2018, the Company entered into amendments with Hercules that resulted in the reclassification of 

the warrant liability to stockholders' equity (deficit) as the amended terms of the warrants qualified for them to be 
accounted for as equity instruments and as such were no longer subject to remeasurement. The fair value of the 
common stock warrants of approximately $0.2 million was reclassified to stockholders' equity (deficit) upon 
execution of the amendment. 

In connection with the funding of the second tranche on December 28, 2018, the Company issued to Hercules a 
warrant to purchase 53,458 shares of its common stock at an exercise price of $9.35 per share. The common stock 
warrant was recorded in stockholders' equity (deficit) at its fair value of approximately $0.9 million on December 28, 
2018. 

In conjunction with the third amendment, the Company issued warrants to Hercules to purchase 16,721 shares 

of its common stock with an exercise price of $23.92 per share. The common stock warrants were recorded in 
stockholders' equity (deficit) at their fair value of approximately $0.3 million on March 27, 2019. The fair value of the 
common stock warrants were determined using an option-pricing model with the following assumptions: time to 
liquidity of 7.0 years, volatility of 75.0%, risk-free rate of 2.3% and stock price based on the March 27, 2019 closing 
price of the Company's common stock reported by The Nasdaq Global Select Market. 

In connection with the funding of the third tranche on December 13, 2019, or the issuance date, the Company 

issued to Hercules a warrant to purchase 8,361 shares of its common stock at an exercise price of $23.92 per 
share. The common stock warrant was recorded in stockholders' equity (deficit) at its fair value of approximately 
$0.3 million on the issuance date. The fair value of the common stock warrants was determined using an option-
pricing model with the following assumptions: time to liquidity of 7.0 years, volatility of 72.7%, risk-free rate of 1.8% 
and stock price based on the December 13, 2019 closing price of the Company's common stock reported by The 
Nasdaq Global Select Market.

In connection with each subsequent draw down under the tranches described above, the Company is obligated 

to issue additional warrants to purchase a number of shares of the Company's common stock determined by 
dividing (x) an amount equal to 1.0% of the principal amount of the applicable tranche by (y) $23.92 subject to 
adjustments following certain corporate events.

Embedded Derivatives and Other Debt Issuance Costs

The Company determined that certain loan features were embedded derivatives requiring bifurcation and 
separate accounting. Those embedded derivatives were bundled together as a single, compound embedded 
derivative and then bifurcated and accounted for separately from the host contract. The Company initially recorded 
a compound derivative liability of $0.7 million, which is required to be marked to market in future periods. 

As of December 31, 2019, the Company calculated the fair values of the compound derivative using the “with 
and without” method under the income approach by computing the difference between the fair value of the Term 
Loan with the compound derivative and the fair value of the Term Loan without the compound derivative. The 
Company calculated the fair values using a probability-weighted discounted cash flow analysis. The key valuation 
assumptions used consist of the discount rate of 10.7% and the probability of the occurrence of certain events of 
20%. The compound derivative liability is being remeasured at each financial reporting period with any changes in 
fair value being recognized as a component of other income (expense), net in the statements of operations and 
comprehensive loss. The fair value of the compound derivative liability was approximately $1.0 million and was 
classified as other long-term liabilities on the balance sheet.

The facility fee, fair value of warrants at issuance, fair value of embedded derivatives which were bifurcated, 
and other debt issuance costs have been treated as debt discounts on the Company’s balance sheet and together 
with the additional payment are being amortized to interest expense throughout the life of the Term Loan using the 
effective interest rate method.

As of December 31, 2019 and 2018, there were unamortized issuance costs and debt discounts of $3.6 million 

and $2.7 million, respectively, which were recorded as a direct deduction from the Term Loan on the balance 
sheets.

117

The following table presents future payments of principal and interest on the Term Loan as of December 31, 

2019. 

(in thousands)

2020

2021

2022

2023

Less: amount representing interest

Present value of Term Loan

Less: current portion

Long-term portion of Term Loan

December 31, 2019

$

$

5,038

21,259

26,675

19,893

72,865

(12,865)

60,000

—

60,000

NOTE 7. COMMITMENTS AND CONTINGENCIES 

The Company has contractual obligations from its operating lease, manufacturing and service contracts, Term 
Loan and tenant improvement loan, and other research and development activities. The following table aggregates 
the Company’s material expected contractual obligations and commitments as of December 31, 2019. 

(in thousands)
Term Loan(1)
Lease obligations(2)

Tenant improvement loan
Manufacturing and service contracts(3)

December 31, 2019

Total

Less than 
One Year

One to 
Three Years

Three to 
Five Years

More than 
Five Years

$

72,865

$

5,038

$

47,934

$

19,893

$

20,774

140

600,269

1,309

93

64,354

5,018

47

5,953

—

83,107

113,202

339,606

—

8,494

—

Total contractual obligations and commitments

$ 694,048

$

70,794

$ 136,106

$ 139,048

$ 348,100

(1) The long-term debt obligation is comprised of the Third Amended to the Loan and Security Agreement that was executed during March 

2019.

(2) These amounts are comprised of the rent payments on our existing lease and on the Second Expansion Premises which will 

commence on September 2020 under our amended lease that was executed on August 14, 2019.

(3) The purchase obligations are comprised of our non-cancelable purchase commitments under our Manufacturing and Commercial 
Supply Agreement with Patheon. These amounts are based on forecasts that may include estimates of our future market demand, 
quantity discounts and manufacturing efficiencies.

Facilities

On August 14, 2019, the Company extended the lease for its offices and laboratory space in South San 

Francisco. See Note 4. "Leases" for additional information about this lease.

Other Commitments

On October 4, 2019, the Company and Patheon entered into a multi-year Manufacturing and Commercial 
Supply Agreement, or the Supply Agreement, under which Patheon agreed to manufacture and supply veverimer to 
support the Company's commercialization efforts. Patheon has also agreed to manufacture and supply veverimer to 
support the Company’s drug development and clinical trial activities. Under the Supply Agreement, the Company is 
obligated to make certain purchases of API. The Company and Patheon are also parties to a Master Development/
Validation Services and Clinical/Launch Supply Agreement, or the MDA, pursuant to which Patheon agreed to 
manufacture and supply veverimer. Certain manufacturing activities previously governed by the MDA are now 
subject to the Supply Agreement, whereas other ongoing manufacturing activities under the MDA will continue to be 
governed by the MDA until such activities are complete.

The Supply Agreement may be terminated by either party following an uncured material breach by the other 
party, in the event the other party becomes insolvent or subject to bankruptcy proceedings, or in connection with a 

118

force majeure event that continues beyond 12 months. In addition, the Supply Agreement may be terminated by the 
Company upon the occurrence of certain regulatory events or actions, including: (i) if the Company does not obtain 
regulatory approval for veverimer by a specified date or (ii) if the Company terminates its commercialization of 
veverimer or fails to launch veverimer by a specified date. The Company’s obligation to purchase veverimer is 
subject to minimum and maximum annual commitments, with the minimum commitments subject to reduction in 
certain circumstances. Patheon has agreed to make facility improvements under the Supply Agreement and will be 
the exclusive owner of the purchased equipment and facility improvements. Patheon may manufacture other 
products with the facility improvements when not occupied by manufacturing veverimer. Under the Supply 
Agreement, the Company has agreed to reimburse Patheon up to a specified amount for plant modifications. These 
payments will be expensed to research and development prior to FDA approval of veverimer.

The Company also enters into other contracts in the normal course of business with contract research 
organizations, contract development and manufacturing organizations and other service providers and vendors. 
These contracts generally provide for termination on short notice and are cancelable contracts and accordingly, are 
not included in the contractual obligations and disclosures summarized above.

Contingencies

While there are no legal proceedings the Company is aware of, the Company may become party to various 
claims and complaints arising in the ordinary course of business. Management does not believe that any ultimate 
liability resulting from any of these claims will have a material adverse effect on its results of operations, financial 
position, or liquidity. However, management cannot give any assurance regarding the ultimate outcome of these 
claims, and their resolution could be material to operating results for any particular period, depending upon the level 
of income for the period.

Guarantees and Indemnifications

The Company indemnifies each of its directors and officers for certain events or occurrences, subject to certain 
limits, while the director is or was serving at the Company’s request in such capacity, as permitted under Delaware 
law and in accordance with its certificate of incorporation and bylaws. The term of the indemnification period lasts as 
long as a director may be subject to any proceeding arising out of acts or omissions of such director in such 
capacity. The maximum amount of potential future indemnification is unlimited; however, the Company currently 
holds director liability insurance. This insurance allows the transfer of risk associated with the Company’s exposure 
and may enable it to recover a portion of any future amounts paid. The Company believes that the fair value of 
these indemnification obligations is minimal. Accordingly, it has not recognized any liabilities relating to these 
obligations for any period presented.

NOTE 8. STOCKHOLDERS' EQUITY

On July 2, 2018, the Company’s amended and restated certificate of incorporation became effective, 
authorizing the Company to issue a total of 440,000,000 shares of all classes of capital stock, consisting of 
400,000,000 shares of common stock, par value $0.001 per share, and 40,000,000 shares of preferred stock, par 
value $0.001 per share. As of December 31, 2019 and 2018, the Company had 49,763,176 and 42,148,247 shares 
of common stock outstanding, respectively. As of December 31, 2019 and 2018, the Company had no shares of 
preferred stock outstanding.

Common Stock

On July 2, 2018, the Company completed its IPO and issued 13,455,000 shares of common stock at an offering 

price of $19.00 per share for net proceeds of approximately $237.7 million, after deducting underwriting discounts 
and commissions of $17.9 million. Upon the closing of the IPO, all of the 104,225,638 shares of convertible 
preferred stock outstanding were automatically converted on a 1:3.98 basis into 26,187,321 shares of common 
stock. 

On April 8, 2019, the Company consummated an underwritten public offering and issued 6,440,000 shares of 
common stock, which included the exercise in full by the underwriters of their option to purchase 840,000 additional 
shares of common stock at an offering price of $36.00 per share for net proceeds of approximately $217.9 million, 
after deducting underwriting discounts and commissions of $13.9 million.

Common stock reserved for future issuance as of December 31, 2019 and 2018, consisted of the following.

119

Stock options and RSUs issued and outstanding

Stock options, RSUs and ESPP shares authorized for future issuance

Total

NOTE 9. STOCK-BASED COMPENSATION

Equity Incentive Plans

December 31, 
2019

December 31, 
2018

6,809,257

3,257,316

10,066,573

4,599,307

4,534,784

9,134,091

During 2013, the Company adopted an equity compensation plan, the 2013 Equity Incentive Plan, or 2013 Plan, 

for eligible employees, officers, directors, advisors, and consultants. The 2013 Plan provided for the grant of 
incentive and non-statutory stock options. In June 2018, the Company's board of directors and stockholders 
approved the 2018 Equity Incentive Plan, or 2018 Plan. Any shares of common stock covered by awards granted 
under the 2013 Plan that terminated after June 22, 2018 by expiration, forfeiture, or cancellation were added to the 
2018 Plan reserve and shares available for future issuance under the 2013 Plan were canceled.

The initial number of shares of common stock available for issuance under the 2018 Plan was 4,000,000. 
Unless our board of directors provides otherwise, beginning on January 1, 2019 and continuing until the expiration 
of the 2018 Plan, the total number of shares of common stock available for issuance under the 2018 Plan will 
automatically increase annually on January 1 by the lesser of (i) 3,200,000 shares of Common Stock, (ii) 4% of the 
total number of issued and outstanding shares of common stock as of December 31 of the immediately preceding 
year and (iii) an amount determined by the board of directors. Under the 2018 Plan, any shares that are forfeited or 
expired are added back to the shares available for issuance. In the year ended December 31, 2019, the number of 
shares of common stock reserved for issuance under the 2018 Plan was increased by 1,685,929 shares. As of 
December 31, 2019, 2,098,380 shares of common stock were available for future issuance of options and restricted 
stock and other stock-based awards under the 2018 Plan.

The terms of the stock option agreements, including vesting requirements, are determined by the board of 
directors, subject to the provisions of the plans. Options granted by the Company vest over a period of one to 
four years and are exercisable after they have been granted for up to 10 years from the date of grant. Per the 
Company’s equity incentive plan, the term of the option expires, upon the earliest of 1) termination of continuous 
service for cause 2) three months after the termination of continuous service for reasons other than cause, death or 
disability 3) 12 months after the termination of continuous service due to disability 4) 18 months after the 
employee’s death if the employee died during the period of continuous service 5) expiration date in the grant notice 
or 6) the day before the tenth anniversary of the date of grant. The exercise price of the incentive stock options 
must equal at least the fair market value of the stock on the date of grant.

The 2013 Plan and the 2018 Plan allow for early exercise where the option holders may exercise their options 

prior to vesting. Common stock that is issued upon the early exercise of options is subject to repurchase by the 
Company at the original exercise price at the option of the Company. As of December 31, 2019 and 2018, there 
were 5,040 shares and 20,193 shares, respectively, of common stock that were subject to repurchase with an 
aggregate purchase price of approximately $17 thousand and $89 thousand reflecting a weighted average price of 
$3.47 and $4.40 per share, respectively.

The following table summarizes stock option activity under the plans for the year ended December 31, 2019.

Balance at December 31, 2018

Granted

Exercised

Forfeited or canceled

Balance at December 31, 2019

Vested and expected to vest at December 31, 2019

Weighted-
Average
Exercise
Price

5.99

29.71

1.77

28.29

18.38

17.96

Shares

4,577,515

$

3,720,091

(1,108,700)

(390,923)

6,797,983

6,471,442

$

$

Weighted-
Average
Remaining
Contractual
Term 
(years)

Aggregate
Intrinsic
Value
(thousands)

8.0 $

84,290

8.4 $

133,892

8.3 $

129,998

120

 
All outstanding options can be early exercised.

Beginning in the year ended December 31, 2018, the Company began to issue restricted stock units, or RSUs, 
to directors under the 2018 Plan. Awards granted to directors vest on the earlier of the one-year anniversary of the 
award's date of grant or the date of the Company’s next annual meeting of stockholders that occurs following the 
date of grant.

The following table summarizes RSU activity under the 2018 Plan for the year ended December 31, 2019.

Unvested balance at December 31, 2018

Granted

Vested

Forfeited

Weighted-
Average
Grant Date
Fair Value

19.00

36.74

19.00

Shares

21,792

$

11,274

(21,792)

—

Unvested balance at December 31, 2019

11,274

$

36.74

The total vest date fair value of RSUs vested in the year ended December 31, 2019 was $0.8 million. There 

were no RSUs that vested during the years ended December 31, 2018 and 2017.

Employee Stock Purchase Plan

In June 2018, the Company's board of directors and stockholders approved the Tricida Inc. ESPP, or ESPP. 

The ESPP allows eligible employees to have up to 15.0% of their eligible compensation withheld and used to 
purchase common stock, subject to a maximum of $25,000 worth of stock purchased in a calendar year or no more 
than 2,500 shares in an offering period, whichever is less. An offering period consists of a six-month purchase 
period, with a look back feature to our stock price at the commencement of the offering period. Eligible employees 
can purchase the Company’s common stock at the end of the offering period at 85.0% of the lower of the closing 
price of our common stock on The Nasdaq Global Select Market on the first and last day of the offering periods. 

The initial number of shares of common stock available for issuance under the ESPP, was 800,000. Unless the 

Company's board of directors provides otherwise, beginning on January 1, 2019, the maximum number of shares 
which shall be made available for sale under the ESPP will automatically increase on the first trading day in January 
of each calendar year during the term of the ESPP by an amount equal to the lesser of (i) one percent (1.0%) of the 
total number of shares issued and outstanding on December 31 of the immediately preceding calendar year, (ii) 
800,000 shares or (iii) an amount determined by the board of directors. 

In the year ended December 31, 2019, the number of shares of common stock reserved for issuance under the 

ESPP was increased by 421,482 shares. The Company issued 44,437 shares under the ESPP, representing 
approximately $1.1 million in employee contributions, for the year ended December 31, 2019. As of December 31, 
2019, there were 1,158,936 shares of commons stock were available for future issuance under the ESPP.

Performance Awards

In August 2019, the Company granted 594,000 stock options under its 2018 Plan with a performance based 

milestone with graded vesting over 18 months. Compensation expense for the performance-based awards is 
recorded over the estimated service period when the performance conditions are deemed probable of achievement. 
For the year ended December 31, 2019, the stock compensation expense recorded during the period was for 
service-based awards and performance conditions deemed probable of achievement and/or achieved.

Stock Option Valuation Assumptions

As stock-based compensation recognized is based on options ultimately expected to vest, the expense has 
been reduced for estimated forfeitures. The Company uses the Black-Scholes option pricing model to determine the 
estimated fair value of stock options at the date of the grant. The Black-Scholes model includes inputs that require 
the input of subjective assumptions, including expected volatility, expected dividend yield, expected term, risk-free 
rate of return, and the estimated fair value of the underlying common stock on the date of grant. 

121

 
Expected Term: The expected term of the options represents the average period the stock options are expected 

to remain outstanding. As the Company does not have sufficient historical information to develop reasonable 
expectations about future exercise patterns and post-vesting employment termination behavior, the expected term 
of options granted is derived from the average midpoint between the weighted average vesting term and the 
contractual term, also known as the simplified method.

Expected Volatility: Beginning in the fourth fiscal quarter of 2019, expected volatility is estimated using a 
weighted-average historical volatility for our common stock and the historical volatility of the common stock of a 
representative group of comparable publicly traded companies over a period equal to the expected term of the stock 
option grants. Prior to the fourth fiscal quarter of 2019, since the Company did not have sufficient trading history for 
its common stock, the expected volatility was based on the historical volatility of the common stock of comparable 
publicly traded companies. The Company selected companies with comparable characteristics, including enterprise 
value, risk profiles, position within the industry, and with historical share price information sufficient to meet the 
expected life of the Company's stock-based awards.

Risk-Free Interest Rate: The risk-free interest rate is based on the yield of U.S. Treasury notes as of the grant 

date with terms commensurate with the expected term of the option.

Expected Dividends: The expected dividends assumption is based on the Company’s expectation of not paying 

dividends in the foreseeable future.

The fair value of the stock options granted to employees for the years ended December 31, 2019, 2018 and 

2017 was calculated with the following assumptions.

Risk-free interest rate

Expected volatility

Expected term (in years)

Expected dividends

Years Ended December 31,

2019

2018

2017

2.1 %

73.6 %

5.9

— %

2.7 %

1.7 %

64.6 % 72.7% - 78.5%

5.8

— %

6.2 - 6.3

— %

The fair value of the stock options granted to nonemployees for the years ended December 31, 2019, 2018 and 

2017 was calculated with the following assumptions.

Risk-free interest rate

Expected volatility

Expected term (in years)

Expected dividends

Years Ended December 31,

2019

2018

2017

2.5 %

76.4 %

6.4

— %

2.7 %

1.7% - 2.2%

68.4 % 70.8% - 73.1%

10.0

— %

6.5 - 8.9

— %

The following table summarizes the weighted-average fair value per share of stock options granted and the total 

intrinsic value of stock options exercised for the years ended December 31, 2019, 2018 and 2017. 

(in thousands, except per share amounts)

Years Ended December 31,

2019

2018

2017

Stock options granted - weighted-average grant date fair value per share

$

19.28

$

10.39

$

Stock options exercised - intrinsic value

34,416

1,935

1.67

30

122

 
 
 
 
Stock-Based Compensation

The following table presents stock-based compensation expense as reported in the Company’s statements of 

operations and comprehensive loss for the years ended December 31, 2019, 2018 and 2017. 

(in thousands)

Research and development

General and administrative

Total

Years Ended December 31,

2019

2018

2017

$

$

13,547

$

2,643

$

11,621

2,509

25,168

$

5,152

$

379

497

876

The following table presents stock-based compensation expense by award type as reported in the Company’s 

statements of operations and comprehensive loss for the years ended December 31, 2019, 2018 and 2017. 

(in thousands)

Stock options

RSUs

ESPP

Total

Years Ended December 31,

2019

2018

2017

24,271

$

4,806

$

447

450

202

144

25,168

$

5,152

$

876

—

—

876

$

$

As of December 31, 2019, there was approximately $54.6 million of unrecognized stock-based compensation 

associated with stock options which the Company expects to recognize over a weighted-average period of 
2.6 years. As of December 31, 2019, there was approximately $0.2 million of unrecognized stock-based 
compensation associated with RSUs which the Company expects to recognize over a weighted-average period of 
0.4 years.

NOTE 10. NET LOSS PER SHARE

The following table sets forth the computation of the basic and diluted net loss per share attributable to common 

stockholders for the years ended December 31, 2019, 2018 and 2017. 

 (In thousands, except share and per share amounts)

2019

2018

2017

Years Ended December 31,

Numerator:

Net loss

Denominator:

$

(176,813) $

(102,808) $

(41,290)

Weighted average common shares outstanding

Less: weighted average shares subject to repurchase

47,530,174

22,158,354

(8,937)

(12,162)

2,267,732

(130,042)

Weighted average number of shares used in basic and diluted 

net loss per share

47,521,237

22,146,192

2,137,690

Net loss per share, basic and diluted

$

(3.72) $

(4.64) $

(19.32)

Since the Company was in a loss position for all periods presented, basic net loss per share is the same as 
diluted net loss per share for all periods as the inclusion of all potential common shares outstanding would have 
been anti-dilutive. 

The following weighted-average outstanding common stock equivalents were excluded from the computation of 

diluted net loss per share attributable to common stockholders for the periods presented because including them 
would have been antidilutive.

123

 
 
 
Series A convertible preferred stock

Series B convertible preferred stock

Series C convertible preferred stock

Series D convertible preferred stock

Warrants to purchase convertible preferred or common stock

Common stock subject to repurchase

Options and RSUs issued and outstanding

Total

NOTE 11. INCOME TAXES

December 31,

2019

2018

—

—

—

—

—

—

—

—

131,998

5,040

6,809,257

6,946,295

106,916

20,193

4,599,307

4,726,416

2017

2,839,886

8,172,579

8,996,586

6,154,166

24,104

366

3,588,663

29,776,350

The Company recorded a tax benefit of $0.1 million during the year ended December 31, 2019 and did not 
record a provision or benefit for income taxes during the years ended December 31, 2018 and 2017. The significant 
components of the Company’s net deferred tax assets as of December 31, 2019 and 2018 are shown below. 

(in thousands)

Deferred tax assets

Net operating loss carryforwards

Research and development credits

Capitalized assets

Accruals and reserves

Operating lease liabilities

Stock-based compensation

Gross deferred tax assets

Deferred tax liabilities

Operating lease right-of-use assets

Gross deferred tax liabilities

Total net deferred tax assets

Less: valuation allowance

Net deferred tax assets

December 31,

2019

2018

$

82,252

$

8,968

79

651

2,070

4,250

98,270

(1,969)

(1,969)

96,301

(96,301)

$

— $

45,215

4,090

23

390

806

—

50,524

—

—

50,524

(50,524)

—

 A valuation allowance is established when it is more likely than not that a deferred tax asset will not be 
realized. As of December 31, 2019 and 2018, the Company's valuation allowance was $96.3 million and $50.5 
million, respectively. The valuation allowance increased by $45.8 million for the year ended December 31, 2019. 
The increase in the 2019 valuation allowance was primarily due to the addition of the 2019 net operating loss 
carryforwards.

The following is a reconciliation between the U.S. federal income statutory tax rate and the Company’s effective 

tax rate for the years ended December 31, 2019, 2018 and 2017.

124

 
 
 
U.S. federal statutory rate

State income taxes, net of federal benefit

Stock-based compensation

Permanent adjustments

Change to valuation allowance

Tax Cuts and Jobs Act Impact

Research and development credits

Net unrealized gain on available-for-sale investments

Other

Effective tax rate

Years Ended December 31,

2019

2018

2017

21.0 %

21.0 %

34.0 %

—

2.2

(0.1)

(25.9)

—

2.8

0.1

—

0.1 %

—

(0.2)

(0.1)

(21.9)

—

1.3

—

(0.1)

— %

5.8

(0.7)

4.2

(19.6)

(25.4)

1.6

—

—

— %

On December 22, 2017, the Tax Cut and Jobs Act, or Tax Act, was signed into law. Among other changes 
under the Tax Act was a permanent reduction in the federal corporate income tax rate from 35% to 21% effective 
January 1, 2018. As a result of the reduction in the corporate income tax rate, the Company revalued its net 
deferred tax assets at December 31, 2018, as the changes in tax law are accounted for in the period of enactment, 
resulting in a reduction in the value of our net deferred tax assets of approximately $10.5 million, offset by a 
$10.5 million change in valuation allowance as of that date.

As of December 31, 2019, the Company had approximately $361.9 million of federal net operating losses 
available for future use. Federal net operating losses incurred prior to January 1, 2018 of approximately $89.1 
million expire beginning in 2033 while federal net operating losses incurred after December 31, 2017 of 
approximately $272.8 million will have an indefinite carryforward period, subject to annual limitations. Federal 
research credits of approximately $8.0 million that are available for future use expire beginning in 2033.

At December 31, 2019, the Company also had approximately $89.6 million of state net operating losses 
available for future use that expire beginning in 2033 and state research credits of approximately $4.2 million that 
have no expiration date.

Utilization of the net operating loss carryforwards and the research and development credits carryforwards may 

be subject to a substantial annual limitation due to ownership change limitations that may have occurred or that 
could occur in the future, as required by Sections 382 and 383 of the Internal Revenue Code of 1986, or the Code, 
as amended, as well as similar state and foreign provisions.

The Company has not completed a study to assess whether an ownership change has occurred or whether 

there have been multiple ownership changes since the Company’s formation due to the complexity and cost 
associated with such a study and the fact that there may be additional such ownership changes in the future. If the 
Company has experienced an ownership change at any time since its formation, utilization of the net operating loss 
or research credit carryforwards would be subject to an annual limitation under Section 382 of the Code. Such 
limitation is determined by first multiplying the value of the Company’s stock at the time of the ownership change by 
the applicable long-term and tax-exempt rate, and then could be subject to additional adjustments, as required. Any 
limitation may result in expiration of a portion of the net operating loss or research credit carryforwards before 
utilization. Further, until a study is completed, and any limitation known, no amounts are being considered as an 
uncertain tax position or disclosed as an unrecognized tax benefit. Due to the existence of the valuation allowance, 
future changes in the Company’s unrecognized tax benefits will not impact its effective tax rate. Any carryforwards 
that will expire prior to utilization as a result of such limitations will be removed from deferred tax assets with a 
corresponding reduction of the valuation allowance.

ASC Topic 740-10 prescribes a comprehensive model for the recognition, measurement, presentation and 
disclosure in financial statements of any uncertain tax positions that have been taken or expected to be taken on a 
tax return. As of December 31, 2019 and 2018, the Company had unrecognized tax benefits of $2.5 million and 
$1.3 million, respectively. The amount of unrecognized tax benefits is not expected to significantly change over the 
next twelve months. No amounts, outside of valuation allowance, would impact the effective tax rate on continuing 
operations. The beginning and ending gross unrecognized tax benefits amounts are as follows.

125

 
 
(in thousands)

Gross unrecognized tax benefits at beginning of year

Additions for tax positions related to prior year

Decrease related to prior year tax provisions

Additions for tax positions related to current year

Gross unrecognized tax benefits at end of year

Years Ended December 31,

2019

2018

2017

1,297

$

819

$

—

—

1,246

—

—

478

2,543

$

1,297

$

574

2

(92)

335

819

$

$

It is the Company’s policy to include penalties and interest expense related to income taxes as a component of 
income tax expense as necessary. Management determined that no accrual for interest and penalties was required 
as of December 31, 2019.

The Company’s tax jurisdictions are the United States and California. The Company’s tax years from 2013 to 
2019 will remain open for examination by the federal and state authorities for three and four years respectively, from 
the date of utilization of any net operating loss or tax credits. The Company is not currently subject to income tax 
examinations by any authority.

NOTE 12. SUBSEQUENT EVENTS

In August 2019, in accordance with the Federal Food, Drug, and Cosmetic Act, or the Act, the Company paid a 

fee of $2.6 million to the FDA under the Prescription Drug User Fee Act in conjunction with the filing of its NDA for 
veverimer. The Company filed a request with the FDA to grant a waiver and refund of the application fee under the 
small business waiver provision of the Act. Due to the uncertainty regarding the collectability of this refund, the 
Company recorded this filing fee as a research and development expense in the quarter ended September 30, 
2019. In January 2020, the FDA granted the Company’s request for a waiver and refunded the application fee in 
February 2020. The refund will be recorded as a gain in research and development expense for the three months 
ending March 31, 2020.

NOTE 13. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) 

The following presents certain unaudited quarterly financial information for the years ended December 31, 2019 

and 2018. This information has been prepared on the same basis as the audited financial statements and includes 
all adjustments (consisting only of normal recurring adjustments) necessary to present fairly the unaudited quarterly 
results of operations set forth herein. Net loss per share for all periods presented has been retroactively adjusted to 
reflect the 1-for-3.98 reverse stock split effected on June 15, 2018.

(in thousands, except per share data)

Q1

Q2

Q3

Q4

2019

Operating expenses

Net loss

Net loss per share, basic and diluted

(in thousands, except per share data)

Operating expenses

Net loss

Net loss per share, basic and diluted

$

$

$

$

37,775

$

37,837

$

45,096

$

(37,897)

(36,626)

(44,119)

(0.90) $

(0.75) $

(0.89) $

58,116

(58,171)

(1.17)

2018

Q1

Q2

Q3

Q4

20,098

$

25,279

$

29,408

$

(20,504)

(25,362)

(29,098)

(9.00) $

(10.89) $

(0.71) $

28,810

(27,844)

(0.66)

126

 
 
 
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL 
DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures that are designed to ensure that information 
required to be disclosed in the Company’s reports under the Exchange Act is recorded, processed, summarized 
and reported within the time periods specified in the SEC’s rules and forms, and that such information is 
accumulated and communicated to management, including the Company’s Chief Executive Officer and Chief 
Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

The Company’s management carried out an evaluation, under the supervision and with the participation of our 
Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures, 
as defined in Rules 13a–15(e) and 15d–15(e) of the Exchange Act, as of December 31, 2019. Based on the 
evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure 
controls and procedures were effective as of December 31, 2019.

Management’s Annual Report on Internal Control Over Financial Reporting

The Company’s management is responsible for establishing and maintaining adequate internal control over 

financial reporting as defined in Rules 13a–15(f) and 15d–15(f) under the Exchange Act. The Company’s internal 
control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial 
reporting and the preparation of financial statements for external purposes in accordance with GAAP. The 
Company’s internal control over financial reporting includes those policies and procedures that: (i) pertain to the 
maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of 
the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit 
preparation of financial statements in accordance with GAAP, and that receipts and expenditures of the Company 
are being made only in accordance with authorizations of management and directors of the Company; and (iii) 
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or 
disposition of the Company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect 

misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that 
controls may become inadequate because of changes in conditions, or that the degree of compliance with the 
policies or procedures may deteriorate.

Under the supervision of our Chief Executive Officer and Chief Financial Officer, our management assessed the 

effectiveness of the Company’s internal control over financial reporting as of December 31, 2019. In making this 
assessment, management used the criteria set forth in Internal Control—Integrated Framework (2013 framework) 
issued by the Committee of Sponsoring Organizations of the Treadway Commission, or COSO. Based on this 
assessment, our management has concluded that the Company’s internal control over financial reporting was 
effective as of December 31, 2019.

Our independent registered public accounting firm, Ernst & Young LLP, has audited our Consolidated Financial 
Statements included in Item 8 of this Annual Report on Form 10-K and have issued a report on our internal control 
over financial reporting as of December 31, 2019. Their report on the audit of internal control over financial reporting 
appears below.

Changes in Internal Control over Financial Reporting

There have been no changes to our internal control over financial reporting (as defined in Rules 13a-15(f) and 
15d-15(f) under the Exchange Act) during the year ended December 31, 2019 that have materially affected, or are 
reasonably likely to materially affect, our internal control over financial reporting.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and the Board of Directors of Tricida, Inc.:

127

Opinion on Internal Control Over Financial Reporting

We have audited Tricida, Inc.’s internal control over financial reporting as of December 31, 2019, based on 

criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring 
Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Tricida, Inc. (the 
Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 
2019, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board 

(United States) (PCAOB), the 2019 financial statements of the Company and our report dated March 2, 2020 
expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting 
and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying 
Management’s Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an 
opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting 
firm registered with the PCAOB and are required to be independent with respect to the Company in accordance 
with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange 
Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan 

and perform the audit to obtain reasonable assurance about whether effective internal control over financial 
reporting was maintained in all material respects. 

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that 
a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based 
on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We 
believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance 
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in 
accordance with generally accepted accounting principles. A company’s internal control over financial reporting 
includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, 
accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable 
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance 
with generally accepted accounting principles, and that receipts and expenditures of the company are being made 
only in accordance with authorizations of management and directors of the company; and (3) provide reasonable 
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s 
assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect 

misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that 
controls may become inadequate because of changes in conditions, or that the degree of compliance with the 
policies or procedures may deteriorate.

/s/ Ernst & Young LLP 

Redwood City, California

March 2, 2020

ITEM 9B. OTHER INFORMATION

None.

128

PART III

Certain information required by Part III is omitted from this Annual Report on Form 10-K and is incorporated 

herein by reference to our definitive Proxy Statement for our next Annual Meeting of Stockholders (the “Proxy 
Statement”), which we intend to file pursuant to Regulation 14A of the Securities Exchange Act of 1934, as 
amended, within 120 days after December 31, 2019.

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information required by this Item concerning our directors and corporate governance is incorporated by 

reference to the information set forth in the section titled “Directors and Corporate Governance” in our Proxy 
Statement. Information required by this Item concerning our executive officers is incorporated by reference to the 
information set forth in the section entitled “Executive Officers of the Company” in our Proxy Statement. Information 
required by this Item regarding our Section 16 reporting compliance and code of business conduct and ethics is 
incorporated by reference to the information set forth in the section entitled “Security Ownership of Certain 
Beneficial Owners and Management and Related Stockholder Matters” in our Proxy Statement.

ITEM 11. EXECUTIVE COMPENSATION

The information required by this Item regarding executive compensation is incorporated by reference to the 
information set forth in the sections titled “Executive Compensation” and “Compensation for Directors” in our Proxy 
Statement.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED 
STOCKHOLDER MATTERS

The information required by this Item regarding security ownership of certain beneficial owners and 

management is incorporated by reference to the information set forth in the section titled “Security Ownership of 
Certain Beneficial Owners and Management and Related Stockholder Matters” in our Proxy Statement.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS AND DIRECTOR 
INDEPENDENCE

The information required by this Item regarding executive compensation is incorporated by reference to the 
information set forth in the sections titled “Certain Relationships and Related-Person Transactions,” “Corporate 
Governance,” and “Board of Directors and Committees” in our Proxy Statement.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information required by this Item regarding principal accountant fees and services is incorporated by 
reference to the information set forth in the section titled “Principal Accountant Fees and Services” in our Proxy 
Statement.

129

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

PART IV

(a)

(1) Financial Statements

The financial statements filed as part of this report are included in Part II, Item 8. of this Annual 

Report on Form 10-K.

(2) Financial Statement Schedules

Financial statement schedules have been omitted as the information required is not applicable or 
the information is presented in the financial statements and related notes included in Part II, Item 8. of 
this Annual Report on Form 10-K.

(b) Exhibits

Exhibit 
Number Exhibit Description

EXHIBIT INDEX

3.1

3.2

4.1

4.2

4.3

4.4

4.5

4.6

4.7

4.8

Amended and Restated Certificate of Incorporation of Registrant, as currently in effect (incorporated by 
reference to Exhibit 3.1 to the Current Report on Form 8-K filed on July 2, 2018).

Bylaws of Registrant, as currently in effect (incorporated by reference to Exhibit 3.2 to the Current 
Report on Form 8-K filed on July 2, 2018).

Amended and Restated Investor Rights Agreement among the Registrant and certain of its 
stockholders, dated November 7, 2017, as amended (incorporated by reference to Exhibit 4.1 to the 
Registration Statement on Form S-1 (333-225420) filed on June 4, 2018).

Amendment No. 1 to Amended and Restated Investor Rights Agreement among the Registrant and 
certain of its stockholder, dated February 28, 2018 (incorporated by reference to Exhibit 4.2 to the 
Registration Statement on Form S-1 (333-225420) filed on June 4, 2018).

Specimen common stock certificate of the Registrant (incorporated by reference to 4.3 to the 
Registration Statement on form S-1 (333-225420), Amendment No. 2 filed on June 25, 2018).

Warrant Agreement to Purchase Shares of Common Stock, dated February 28 2018, between the 
Registrant and Hercules Capital, Inc. (incorporated by reference to Exhibit 4.5 to the Registration 
Statement on Form S-1 (333-225420) filed on June 4, 2018).

Warrant Agreement to Purchase Shares of Common Stock, dated February 28, 2018, between the 
Registrant and Hercules Technology III, L.P. (incorporated by reference to Exhibit 4.6 to the 
Registration Statement on Form S-1 (333-225420) filed on June 4, 2018).

Warrant Agreement to Purchase Shares of Common Stock of the Company, dated as of December 28, 
2018 (incorporated by reference to Exhibit 4.1 to the Current report on Form 8-K filed on January 3, 
2019).

Warrant Agreement to Purchase Shares of Common Stock of the Company, dated as of March 27, 
2019 (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed on March 28, 
2019).

Warrant Agreement to Purchase Shares of Common Stock of the Company, dated as of March 27, 
2019 (incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K filed on March 28, 
2019).

4.9*

Warrant Agreement to Purchase Shares of Common Stock of the Company, dated as of December 13, 
2019

130

4.10*

Description of the Company's Common Stock, $0.001 par value

Form of Indemnification Agreement between the Registrant and each of its directors and executive 
officers (incorporated by reference to Exhibit 10.1 to the Registration Statement on Form S-1 
(333-225420), Amendment No. 2 filed on June 25, 2018).

2018 Equity Incentive Plan (incorporated by reference to Exhibit 10.3 to the Registration Statement on 
Form S-1 (333-225420), Amendment No. 2 filed on June 25, 2018).

Form of Director Restricted Stock Unit Award Agreement (annual grant) (incorporated by reference to 
Exhibit 10.4 to the Registration Statement on Form S-1 (333-225420), Amendment No. 2 filed on June 
25, 2018).

Form of Director Stock Option Agreement (annual grant) (incorporated by reference to Exhibit 10.5 to 
the Registration Statement on Form S-1 (333-225420), Amendment No. 2 filed on June 25, 2018).

2018 Employee Stock Purchase Plan (incorporated by reference to Exhibit 10.6 to the Registration 
Statement on Form S-1 (333-225420), Amendment No. 2 filed on June 25, 2018).

Loan and Security Agreement, dated February 28, 2018, among the Registrant, Hercules Capital, Inc. 
and the several banks and other financial institutions or entities from time to time parties thereto 
(incorporated by reference to Exhibit 10.6 to the Registration Statement on Form S-1 (333-225420) 
filed on June 4, 2018).

First Amendment to Loan and Security Agreement and First Amendment to Warrants, dated as of April 
10, 2018, among the Registrant, Hercules Capital, Inc. and the several banks and other financial 
institutions or entities from time to time parties thereto (incorporated by reference to Exhibit 10.7 to the 
Registration Statement on Form S-1 (333-225420) filed on June 4, 2018).

Second Amendment to Loan and Security Agreement, dated as of October 15, 2018, among the 
Registrant, Hercules Capital, Inc. and the several banks and other financial institutions or entities from 
time to time parties thereto (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-
K filed on October 18, 2018).

Third Amendment to Loan and Security Agreement, dated as of March 27, 2019 among Tricida Inc., 
Hercules Capital, Inc. and the several banks and other financial institutions or entities from time to time 
parties thereto (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on 
March 28, 2019).

Lease Agreement, dated April 4, 2014, between the Registrant and ARE-San Francisco No. 17, LLC 
(incorporated by reference to Exhibit 10.8 to the Registration Statement on Form S-1 (333-225420) 
filed on June 4, 2018).

First Amendment to Lease, dated August 2, 2017, between the Registrant and ARE-San Francisco No. 
17, LLC (incorporated by reference to Exhibit 10.9 to the Registration Statement on Form S-1 
(333-225420) filed on June 4, 2018).

Second Amendment to Lease, dated November 7, 2017, between the Registrant and ARE-San 
Francisco No. 17, LLC (incorporated by reference to Exhibit 99.1 to the Current report on Form 8-K 
filed on August 19, 2019).

Third Amendment to Lease, dated August 14, 2019, between the Registrant and ARE-San Francisco 
No. 17, LLC (incorporated by reference to Exhibit 10.1 to the Current report on Form 8-K filed on 
August 19, 2019).

10.1^

10.2^

10.3^

10.4^

10.5^

10.6

10.7

10.8

10.9

10.10

10.11

10.12

10.13

Master Development/Validation Services and Clinical/Launch Supply Agreement (incorporated by 
reference to Exhibit 10.10 to the Registration Statement on Form S-1 (333-225420) filed on June 4, 
2018).

10.14+

10.15†*

Manufacturing and Commercial Supply Agreement with Patheon Austria GmbH & Co KG, dated 
October 4, 2019.

10.16^

Tricida, Inc. Annual Incentive Plan (incorporated by reference to Exhibit 10.1 to the Current report on 
Form 8-K filed on February 22, 2019).

Form of Tricida, Inc. Executive Severance Benefit Plan, as amended (incorporated by reference to 
Exhibit 10.7 to the Registration Statement on Form S-1 (333-225420), Amendment No. 2 filed on June 
25, 2018).

10.17^

131

10.18

23.1*

24.1*

31.1*

31.2*

Form of Tricida, Inc. Executive Severance Benefit Plan, as amended (incorporated by reference to 
Exhibit 10.1 of the Current Report on Form 8-K filed on February 28, 2020).

Consent of Independent Registered Public Accounting Firm.

Power of Attorney (included on the signature page).

Certification of Chief Executive Officer pursuant to Exchange Act Rule 13a-14(a) or 15d-14(a), as 
adopted pursuant to Section 302 of the Sarbanes-Oxley Act.

Certification of Chief Financial Officer pursuant to Exchange Act Rule 13a-14(a) or 15d-14(a), as 
adopted pursuant to Section 302 of the Sarbanes-Oxley Act.

32.1**

Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS* XBRL Instance Taxonomy.

101.SCH* XBRL Taxonomy Extension Schema Document.

101.CAL* XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF* XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB* XBRL Taxonomy Extension Labels Linkbase Document.

101.PRE* XBRL Taxonomy Extension Presentation Linkbase Document.

104*

Inline XBRL for the cover page of this Annual Report on Form 10-K included in the Exhibit 101.

*
**
^
+

†

Filed herewith.
Furnished herewith.
Management contracts and compensation plans and arrangements.
Confidential treatment with respect to specific portions of this Exhibit has been granted, and such 
portions are omitted and have been filed separately with the Securities and Exchange Commission.

Certain portions of this exhibit ((indicated by “[***]”) have been omitted pursuant to Item 601(b)(10)(iv) 
of Regulation S-K because they are not material and would likely cause competitive harm to the 
registrant if publicly disclosed.

132

ITEM 16. FORM 10-K SUMMARY

None.

133

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant 

has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

SIGNATURES

TRICIDA, INC.

Dated: March 2, 2020 

TRICIDA, INC.

By:

/s/ Gerrit Klaerner

Name: Gerrit Klaerner, Ph.D.

Title: Chief Executive Officer and President

134

SIGNATURES AND POWER OF ATTORNEY 

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes 
and appoints Gerrit Klaerner and Geoffrey M. Parker, jointly and severally, as his or her true and lawful attorneys-in-
fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place and 
stead, in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and to file the 
same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange 
Commission, granting unto said attorneys-in-fact and agents full power and authority to do and perform each and 
every act and thing requisite or necessary to be done in and about the premises hereby ratifying and confirming all 
that said attorneys-in-fact and agents, or his or their substitute or substitutes, may lawfully do or cause to be done 
by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the 

following persons on behalf of the registrant and in the capacities and on the dates indicated.

SIGNATURE

/s/ Gerrit Klaerner

Gerrit Klaerner, Ph.D.

/s/ Geoffrey M. Parker

Geoffrey M. Parker

/s/ Steffen Pietzke

Steffen Pietzke

/s/ Klaus Veitinger

Klaus Veitinger, M.D., Ph.D., M.B.A.

/s/ Robert J. Alpern

Robert J. Alpern, M.D.

/s/ David Bonita

David Bonita, M.D.

/s/ Sandra I. Coufal

Sandra I. Coufal, M.D.

/s/ Kathryn Falberg

Kathryn Falberg

/s/ David Hirsch

David Hirsch, M.D., Ph.D.

Chief Executive Officer, 
President and Director 
(Principal Executive Officer)

Chief Financial Officer and Executive Vice 
President
(Principal Financial Officer)

Senior Vice President of Finance 
and Chief Accounting Officer 
(Principal Accounting Officer)

DATE

March 2, 2020

March 2, 2020

March 2, 2020

Chairman of the Board of Directors

March 2, 2020

Director

Director

Director

Director

Director

March 2, 2020

March 2, 2020

March 2, 2020

March 2, 2020

March 2, 2020

135

MANAGEMENT

CORPORATE INFORMATION

Gerrit Klaerner, PhD
Founder, Chief Executive Officer & President

Susannah Cantrell, PhD
EVP, Chief Commercial Officer

Elizabeth Faust, PhD
EVP, Medical Affairs

Robert McKague, JD
EVP, General Counsel & Chief Compliance Officer

Geoffrey Parker
EVP, Chief Financial Officer

Dawn Parsell, PhD
EVP, Clinical Development

Wilhelm Stahl, PhD
EVP, Chief Technology Officer

BOARD OF DIRECTORS

Klaus Veitinger, MD, PhD
Chairman of the Board 
Venture Partner, OrbiMed Advisors, LLC

Robert J. Alpern, MD
Dean and Ensign Professor
Yale School of Medicine

David Bonita, MD
Private Equity Partner, OrbiMed Advisors, LLC

Sandra I. Coufal, MD
Manager, Sibling Capital Ventures LLC

Kathryn Falberg
Director

David Hirsch, MD, PhD
Managing Director, Longitude Capital

Gerrit Klaerner, PhD
Founder, Chief Executive Officer & President

Tricida, Inc.
7000 Shoreline Court, Suite 201
South San Francisco, California  94080
415.429.7800
info@tricida.com

ANNUAL MEETING

June 11, 2020 at 7:00 a.m. Pacific Time
Tricida, Inc.
7000 Shoreline Court, Suite 201
South San Francisco, California  94080

INDEPENDENT REGISTERED PUBLIC 
ACCOUNTING FIRM

Ernst & Young LLP

CORPORATE COUNSEL

Sidley Austin LLP

STOCK INFORMATION

Our common stock is traded on 
The Nasdaq Global Select Market 
under the symbol TCDA

TRANSFER AGENT

Computershare
PO Box 505000
Louisville, Kentucky  40233-5000
United States

Overnight delivery:
462 South 4th Street, Suite 1600
Louisville, Kentucky  40202
United States

Phone:
Toll free: 800.962.4284
Toll: +1.781.575.4247

7000 Shoreline Court, Suite 201  |  South San Francisco, California  94080  |  415.429.7800  |  info@tricida.com